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 $435 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 0.11;5 spare parts with frequency 0.14;6 spare parts with frequency 0.2;7 spare parts with frequency 0.16; and 8 spare parts with frequency 0.39. For what range of shortage costs would stocking 6 spare parts constitute an optimal decision ?

Between 217.5and 533.9

Between 174and 427.1

Between 72.5and 178

Between 145and 355.9

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