Safety Stock. Jackson & Sons Inc. would like to determine the safety stock it needs to maintain for a prod¬ uct, to incur the lowest combination of stockout cost and carrying cost. Each stockout costs $75; the carrying cost for each safety stock unit is $1; the product is ordered five times a year. The following probabilities of running out of stock during an order period are associated with various safety stock levels: LO2 Safety Probability Stock Level of Stockout 10 units 40%

20 20 40 8 80 4 Required: Determine the combined stockout and safety stock carrying cost associated with each level and the recommended level of safety stock.