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 $491 each and have no salvage value. The manager has compiled the frequency distribution for the probable usage of spare parts:4 spare parts with frequency 0.13;5 spare parts with frequency 0.08;6 spare parts with frequency 0.13;7 spare parts with frequency 0.18; and 8 spare parts with frequency 0.48. For what range of shortage costs would stocking 6 spare parts constitute an optimal decision ?

a. Between 130.5and 252.9

b. Between 195.8and 379.4

c. Between 65.26and 126.5

d. Between 156.6and 303.5

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