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 $443 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 0.2;6 spare parts with frequency 0.06;7 spare parts with frequency 0.22; and 8 spare parts with frequency 0.35. For what range of shortage costs would stocking 6 spare parts constitute an optimal decision ?

a. Between 312.2and 401

b. Between 390.3and 501.3

c. Between 130.1and 167.1

d. Between 260.2and 334.2

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