With the aim to bring in SD deeper into management education we compare theconcepts of depreciation and scrappage used in the literature of SD on one side andbusiness economics on the other. We demonstrate that the business economics conceptsof straight-line depreciation and of sudden scrappage can be formulated within the SDmethodology and software. The economic results are better in line with the textbooks ofbusiness economics than those given by the current SD equations. As a result werecommend using a pipeline delay instead of a third-order delay for modellingscrappage. The concepts of straight-line depreciation and sudden scrappage are thencombined with the concepts of aging chains and co-flow in the framework of a simplemodel of a firm. The simulation results are in line with fundamental expectations ofbusiness economics. This will be the basis for our further work on a generic model of afirm which could meet both the didactical challenges of management education and thesophistication of modern System Dynamics.
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