Optimized parameters of the optical configuration of holographic wavelength demultiplexer (HWD) have been obtained with aberration balancing. The wavefront aberration caused by wavelength shift has been minimized. The image size of a point source formed by HWD was determined by ray tracing. To reduce the size of the image, we propose a phase compensation function to calculate the image size. The phase compensation could be achieved by Computer-Generated Hologram (CGH).