The appropriate level of safety stock is typically determined by.

ANSWER IS OPTION D) <<<<<<<<<<<<<<<<<<<<<<<

I would answer D, all of the above. Safety stock by its name is there because of deficiencies in the supply chain / value stream. In some industries, first tier automotive supply, there are heavy penalties for non supply; there is little difference between B & C as you are using working capital to cover your supply problems; internal manufacturing problems or your clients inability to gauge their demand.

A. minimizing expected stockout cost <<<<<<<<<<<<<<<<<<<<<

Dear Washi, D is correct, however the law of supply and demand should be considered.  depending also on the product if it is stock able for a certain period of time.

option C is the  correct answer it is the level of stock held by the co. so as not to fall out of stock

 

THe right option is (B)  choosing the level of safety stock that assures a given service level

All of the above. holds good