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

  • Authors:

  • Eduardo Saggioro Garcia;Caio Fiuza Silva;Eduardo Saliby

  • Affiliations:

  • Universidade Federal do Rio de Janeiro, Brazil;Universidade Federal do Rio de Janeiro, Brazil;Universidade Federal do Rio de Janeiro, Brazil

  • Venue:
  • Proceedings of the 34th conference on Winter simulation: exploring new frontiers
  • Year:
  • 2002

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Abstract

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.