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Problem 1: 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 $491 each and have no salvage value. The manager has compiled the frequency distribution for the probable usage of spare parts:6 spare parts with frequency 0.23;7 spare parts with frequency 0.17;8 spare parts with frequency 0.17;9 spare parts with frequency 0.2; and 10 spare parts with frequency 0.23. For what range of shortage costs would stocking 8 spare parts constitute an optimal decision ?
a. Between 163.7and 325.4b. Between 491and 976.3c. Between 392.8and 781d. Between 327.3and 650.9
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