(Step-by-Step) 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
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 $350 each and have no salvage value. If the manager does not have a spare part on hand it costs $650 in lost production. The manager has compiled a frequency distribution for the probable usage of spare parts, as shown. How many spare parts should the manager order?
| No. of Spares | Frequency |
| 0 | .08 |
| 1 | .30 |
| 2 | .24 |
| 3 | .20 |
| 4 | .18 |
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