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 $497 each and have no salvage value. The manager has compiled the frequency distribution for the probable usage of spare parts:6 spare parts with frequency 0.18;7 spare parts with frequency 0.1;8 spare parts with frequency 0.2;9 spare parts with frequency 0.17; and 10 spare parts with frequency 0.35. For what range of shortage costs would stocking 8 spare parts constitute an optimal decision ?

a. Between 96.64and 229.4 b. Between 193.3and 458.8 c. Between 289.9and 688.2 d. Between 231.9and 550.5

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