Warehousing and inventory management: a simulation model to validate and evaluate the adequacy of an analytical expression for proper safety stock sizing

The purpose of this paper is to validate and test the adequacy of an analytical expression to calculate proper safety stock levels using simulation techniques. The model refers to a periodic review system and a lot-4-lot replenishment policy, with randomness in forecast errors and in order fulfillment. The simulation model is formulated in a spreadsheet environment using MS Excel ® and @Risk ® . The percentage of periods without stockout is computed and compared to the theoretical value expected by the assumptions inherent to the analytical expression.