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 $456 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 0.17;5 spare parts with frequency 0.21;6 spare parts with frequency 0.22;7 spare parts with frequency 0.22; and 8 spare parts with frequency 0.18. For what range of shortage costs would stocking 6 spare parts constitute an optimal decision ?

Between 139.7and 342

Between 419.2and 1026

Between 279.5and 684

Between 335.4and 820.8

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