You can simulate lots of things in LabVIEW. There is a good toolkit for simulation called the LabVIEW Control Design and Simulation Module. You probably wouldn't use the DSC Module, since DSC is used for connecting to OPC servers or PLCs for SCADA applications.
The tricky part about any kind of simulation is developing a model that accurately represents a real-world system. It isn't a trivial task and requires an intimate knowledge of how the system works.
