Disney, S.M., Naim, M.M., Towill, D.R., (1997), “Dynamic simulation modelling for lean logistics”, International Journal of Physical Distribution and Logistics Management, Vol. 27, No. 3, pp174–196. Dynamic Simulation Modelling for Lean Logistics S.M.Disney, M.M.Naim, D.R.Towill * Summary. The Law of Industrial Dynamics ensures that if a production control system can amplify then it will surely find a way of doing so despite the best efforts of production schedulers to take corrective action. In fact practical studies show that such human intervention frequently aggravates the situation with both stock levels and order rates fluctuating alarmingly. The solution is to design an effective system via simulation. This requires the selection of the appropriate control system structure, agreement on the test cases to be used to mimic the operating environment, and finally setting the system parameters to achieve best performance for this scenario. The system demonstrated in this paper has three controllers utilising sales, inventory and work in progress (WIP) data to set production order rates. The resulting Decision Support System can be used by Production Schedulers with confidence in the knowledge that the Law of Industrial Dynamics effects may be minimised. Simulation experiments can determine the best available trade-off in any particular situation such as achieving the lean logistics aim of Minimum Reasonable Inventory (MRI) whilst retaining high Customer Service Levels (CSL). The experimental facility available within the simulation model includes provision for assessing the impact of variable production leadtimes and information delays on system performance. * The Authors are with the Logistics Systems Dynamics Group, Department of Maritime Studies and International Transport, Faculty of Engineering and Environmental Design, University of Wales, Cardiff, PO Box 924, Cardiff, CF1 3TS, UK. Tel/Fax +44 (0)1222 874635.