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 $421 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 0.18;3 spare parts with frequency 0.1;4 spare parts with frequency 0.22;5 spare parts with frequency 0.13; and 6 spare parts with frequency 0.37. For what range of shortage costs would stocking 4 spare parts constitute an optimal decision ?

Between 81.86and 210.5

Between 163.7and 421

Between 245.6and 631.5

Between 196.5and 505.2

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