The optimal size of the safety stock is determined by the relative costs of a stock-out of the item versus the costs of carrying the additional inventory.

Question

Quizplus · Accepted Answer

The optimal size of the safety stock is determined by balancing the costs of stock-outs and carrying additional inventory. The goal is to find the lowest total cost, which may involve carrying a higher safety stock to prevent stock-outs and associated costs.

The Optimal Size of the Safety Stock Is Determined by the Relative