A Manager Intends to Order a New Machine and Must $$\begin{array} { l l } \text { Usage } & \text { Frequency } \\\hline 0 & .08 \\1 & .30 \\2 & .24 \\3 & .20 \\4 & .18\end{array}$$

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 $400 each and have no salvage value. The manager has compiled a frequency distribution for the probable usage of spare parts, as shown: $$\begin{array} { l l } \text { Usage } & \text { Frequency } \\\hline 0 & .08 \\1 & .30 \\2 & .24 \\3 & .20 \\4 & .18\end{array}$$ For what range of shortage costs would stocking one spare part constitute an optimal decision?

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C_e = $400
In order for a stocking level o...

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