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 $422 each and have no salvage value. The manager has compiled the frequency distribution for the probable usage of spare parts:3 spare parts with frequency 0.14;4 spare parts with frequency 0.19;5 spare parts with frequency 0.11;6 spare parts with frequency 0.17; and 7 spare parts with frequency 0.39. For what range of shortage costs would stocking 5 spare parts constitute an optimal decision ?

a. Between 249.4and 397.9

b. Between 207.9and 331.6

c. Between 311.8and 497.4

d. Between 103.9and 165.8

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