This paper describes the implementation and part development of a digital simulation programme for an industrial dynamic system (a customer-producer employment case-study as formulated by J.W.Forrester). It has been shown that with the aid of control theory, the major system details were described in a block diagram. The block diagram describing each sector of the model is constructed and then the complete block diagram is established. It is then used to determine the initial conditions of the

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... ystem. A digital simulation program was developed in "BASIC" language A subroutine was developed to calculate the third order delays occuring in the system. A step function of the independent variable" demand" entering the customer sector was changed from 1000 u/w to 1100 u/w. The system shows a periodic fluctuations in response to the input step with a damping frequency 0.062 rad/w. The system sensitivity was also examined by changing the time for labour adjusting from 10 weeks to 5 weeks which leads to a more stable system. * Dr. Eng., Technical Dep., Arab Qrganisation for Industralization head quarter, Abbasia, Egypt.