Thermal stress caused by extreme temperatures, wind and rain, negatively affects profitability of sheep production due to increased maintenance requirements causing a reduction in weight gain and the efficiency of feed utilisation. The purpose of this paper was to explore the capacity of a bioeconomic model to evaluate biological and economic implications of thermal stress on feedlot lamb production. It was expected that strategies aimed at reducing thermal stress of lambs would lead to improvements in growth rates and feed conversion efficiency, and subsequent economic net benefits. The findings from the model indicated that reducing thermal stress on the lamb all had positive effects on growth rates. Treatments involving shelter and increased fleece length reduced the energy needed to maintain a constant body temperature leading to higher energy availability for growth. Simulating near ideal environmental conditions by providing shelter in the feedlot and having fleece length at 40 mm enabled an almost constant growth rate throughout the year indicating that thermal stress was almost completely alleviated. Based on the assumptions used for this paper and depending on fleece length, it would be rational for a producer with an annual turnover of 5,000 feedlot sheep to spend between $29,000 and $53,000 on a shelter. Being a simulation model, there are an infinite number of assumptions that could be made to derive results and hence the results presented in this paper provide examples of those that can be generated by the model. While results from the model showed that environmental factors affect lamb production in accordance with the literature, further model development would be useful as additional biological equations become available.