The following information is available relating to the stockout of a firm: The selling price of each unit is `200. The carrying costs are `19 per unit. The stockout costs are `50 per unit. (i) If the...

The following information is available relating to the stockout of a firm:

The selling price of each unit is `200. The carrying costs are `19 per unit. The stockout costs are `50 per unit.

(i) If the firm wishes to never miss a sale, what should be its safety stock? What is the total cost associated with this level of safety stock? What are the associated costs with safety stock of 600, 400 and 200 units, respectively?

(ii) What is the optimal safety stock level?