In the past few years, increasing numbers of automatic storage/retrieval system (AS/RS) using computer controlled storage/retrieval machine have been installed. This paper introduces two modeling approaches to determine the best operating policy for AS/RS : an M/G/1 queueing model and a computer simulation model. The operating policy consists of three elements. : the operation command cycle, the storage location method, and the operation dispatching rule. The analysis based on M/G/1 model is suitable for a quick and approximate evaluation, due to its inherent strict assumptions. The computer simulation can be used to perform a more realistic analysis. It is shown through the study that a significant improvement in the throughput and/or the space requirement can be expected by determining the best operating policy to a particular system. Most important, the computer simulation demonstrates its powerful capability in evaluating dynamic stochatic systems with imperfect information.