Previous applications of simulation to information storage and retrieval systems (ISRS) have been overly restrictive in their scope and have failed to consider the environment within which such systems operate. This paper considers the ISRS as a subsystem within a larger system which includes the users and the funders of the retrieval system. The three components form a closed‐loop information feedback system in which user response influences both the funding and operation of the ISRS as it attempts to satisfy user needs within a finite budget allocation. Reward‐cost theory provides the basis for describing user behavior. An industrial dynamics model has been developed to simulate ISRS/ user/funder behavior where a university departmental library is the ISRS component. The results which such an analysis can produce are discussed.