A Nascar team goes on tour for six moths. One major piece of equipment for the car is subject to breakdowns cause by the sudden failure of a specific component. Because the failed component cannot be repaired, the team must carry a stock of repair units of the component, but the cost will be $2000 for each spare unit taken. However, if the equipment fails and a spare is not available, a new unit will have to be flown in on a special mission at a cost of $3000 per unit delivered. An estimate of the number of spares required is given probability distribution below:
|
Number of spares required
|
0
|
1
|
2
|
3
|
|
Probability
|
0.2
|
0.3
|
0.4
|
0.1
|
Determine the number of spares that should be provided if the objective is to minimize costs.