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:6 spare parts with frequency 0.23;7 spare parts with frequency 0.12;8 spare parts with frequency 0.05;9 spare parts with frequency 0.16; and 10 spare parts with frequency 0.44. For what range of shortage costs would stocking 8 spare parts constitute an optimal decision ?

Between 132.2and 163.7

Between 317.3and 392.8

Between 264.4and 327.3

Between 396.6and 491

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