Technico Ltd. has installed a machine costing Rs 4 lacs and is

in the process of deciding on an appropriate number of a

certain spare parts required for repairs. The spare parts cost

Rs 4,000 each but are available only if they are ordered now.

In case the machine fails and no spares are available, the cost

to the company of mending the plant would be Rs 18,000.

The plant has an estimated life of 8 years and the probability

distribution of failures during this time, based on experience

with similar machines, is as follows:

Fail. during 8 yrs 0 1 2 3 4 5 6+

Probability .1 .2 .3 .2 .1 .1 0