11. Fouchee Scents, Inc., makes various scents for use in the manufacture of food products. Although the company does maintain a safety stock, it has a policy of "lean" inventories, with the result that customers sometimes must be turned away. In an analysis of the situation, the company has estimated the cost of being out of stock associated with various levels of safety stock:

Safety Level of Safety Annual Cost Stock Level Stock (in Gallons) of Stockouts Present 5,000 $26,000 New level 1 7,500 14,000 New level 2 10,000 7,000 New level 3 12,500 3,000 New level 4 15,000 1,000 New level 5 17,500 0