Question

what benefits and cost should be analyzed on deciding the proper safety stock level

Answer 1

Safety stock may be described as the inventory kept by the business in reserve to meet out certain contingency situations such as sudden increase of demand of product or shortage in supply of inventory. Sometimes in business due to seasonal demand or supply shortage it is not possible to predict the demand of product. So to meet out uncertainty safety stock must be kept which helps the business to keep customer satisfied and maintain the reputation of business, so customer satisfaction is benefit of maintaining proper safety stock level.

And while maintaining safety stock there are some cost involved to carry stock such as rent of storage space or warehouse,  wages of warehouse staff, security cost, cost of product get outdated or expired. So these cost will be analysed on deciding proper safety stock level.