Somi Corporation wishes to determine the amount of safety stock that it should maintain for Product D that will result in the lowest cost. The following information is available.

Stock out cost80 per occurrence

Carrying cost of safety stock2 per unit

Number of purchase orders5 per year

The available options open to Somi are as follows:

Units of Safety StockProbability of Running Out of Safety Stock

2040%

4020%

5010%

555%

Required: Determine the optimal amount of safety stock?