Question: PLEASE STEP BY STEP ANSWER A company sells a product for which the annual unit holding cost is $10 and unit stockout cost is $20.

PLEASE STEP BY STEP ANSWER

A company sells a product for which the annual unit holding cost is $10 and unit stockout cost is $20. To meet demand, the company orders the product from the supplier four times a year. Over the past several years, the company has observed the following demand during the lead time. In the current system, the reorder point is 110 units and the company considers whether to hold any safety stock. What is the optimal safety stock level so that total cost is minimized? a. 20 b. 30 c. 40 d. 0

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