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 Parts Cost $421 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 0.18;3 Spare Parts With Frequency 0.1;4 Spare Parts With Frequency
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 $421 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 0.18;3 spare parts with frequency 0.1;4 spare parts with frequency 0.22;5 spare parts with frequency 0.13; and 6 spare parts with frequency 0.37. For what range of shortage costs would stocking 4 spare parts constitute an optimal decision ?
a.Between 81.86and 210.5
b. Between 163.7and 421
c. Between 245.6and 631.5
d. Between 196.5and 505.2