The Effect of Lead Time Variability and Safety Stock Automatic Determination on the Frequency of Stockouts and Cost Efficiency at the Warehouse Level

Abstract

This research evaluates the impact of lead time variability through a simulation model developed based on operational parameters in the layer hen farming industry. This simulation compares the effectiveness of automatic safety stock determination (MRP) with a fixed manual approach in mitigating stockout risks and cost inefficiencies. The method used is a Google Spreadsheet-based simulation, comparing a manual policy (fixed 235 units) with an adaptive automatic policy (50, 400, 950 units) across three lead time variability scenarios (Low, Medium, High). The results show the superiority of automatic MRP in unstable environments. Although the manual policy is slightly superior in the Low scenario (0% stockout), it fails in Medium (0% stockout) and High (20% stockout) variability, with costs 30-80 times higher. The automatic system successfully eliminates stockouts (0%) in Medium and High conditions, proving much better cost efficiency.