Purchasing Manager Firm Trying Determine Safety Stock Particular Product Developed Followi Q29307314

The purchasing manager for a firm is trying to determine whatthe safety stock should be for a particular product. She hasdeveloped the following table, which gives the distribution ofdemand during the lead-time and the probabilities: The carryingcost is $5 per unit per year, the ordering cost is $30 per order,and the stockout cost is $40 per unit. The reorder point is 60units, and 6 orders are placed each year. What level of safetystock should be maintained? please explain me.

Demand During

Lead-Time

Probability

40

0.20

50

0.25

60

0.25

70

0.20

80

0.10