Question: A manager is going to purchase new processing equipment and must decide on the number of spare parts to order with the new equipment. The

A manager is going to purchase new processing equipment and must decide on the number of spare parts to order with the new equipment. The spares cost $172 each, and any unused spares will have an expected salvage value of $42 each. The probability of usage can be described by this distribution:
\table[[Number,0,1,2,3],[Probability,15,.60,.20,.05],[Click here for the Excel Data File,,,,]]
If a part fails and a spare is not available, 2 days will be needed to obtain a replacement and install it. The cost for idle equipment is $570 per day. What quantity of spares should be ordered?
a. Use the ratio method.
Note: Round the SL answer to 2 decimal places and the number of spares to the nearest whole number.
b. Use the tabular method and determine the expected cost for the number of spares recommended. Note: Do not round intermediate calculations. Round your final answer to 2 decimals.
Expected cost is
 A manager is going to purchase new processing equipment and must

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