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 $455 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 0.17;3 spare parts with frequency 0.05;4 spare parts with frequency 0.09;5 spare parts with frequency 0.17; and 6 spare parts with frequency 0.52. For what range of shortage costs would stocking 4 spare parts constitute an optimal decision ?

Between 64.17and 102.2

Between 128.3and 204.4

Between 154and 245.3

Between 192.5and 306.6

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