Final answer:
Safety stock should be considered in inventory decisions to prevent stockouts.
Step-by-step explanation:
Safety stock should be considered when variation in inventory decisions could lead to stockouts. Safety stock serves as a buffer to prevent stockouts in case of unexpected variations in demand or lead time. It is important to have safety stock to avoid customer dissatisfaction due to unfulfilled orders and potential loss of sales.
For example, if a retailer experiences a sudden increase in customer demand or a delay in receiving inventory from suppliers, having safety stock can ensure that the retailer is still able to meet customer demand and avoid stockouts.
Therefore, when making inventory decisions in the simulation, it is crucial to consider safety stock in order to mitigate the risk of stockouts.