Question: A manager intends to order a new machine and must now decide on the number of spare parts to order along with the machine. The

A manager intends to order a new machine and must now decide on the number of spare parts to order along with the machine. The parts cost $419 each and have no salvage value. The manager has compiled the frequency distribution for the probable usage of spare parts:2 spare parts with frequency 0.05;3 spare parts with frequency 0.21;4 spare parts with frequency 0.2;5 spare parts with frequency 0.07; and 6 spare parts with frequency 0.47. For what range of shortage costs would stocking 4 spare parts constitute an optimal decision ?

Between 73.61and 178.5

Between 220.8and 535.4

Between 176.7and 428.3

Between 147.2and 356.9

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