In this paper, Monte Carlo computer simulation is used to estimate the effect of oscillator instabilities on signal processing. The key link of this method is generating high quality random number sequence simulating the phase noise of the oscillator. The case of the pulse compression performance is discussed as an example in order to clarify: (1) the effect of oscillator instabilities on pulce compression performance, and (2) the requirement of oscillator frequency stability when the tolerance of the system performance is known. Finally, some computer simulation examples are given which will provide as reference data for engineering designers.