The employees of General Manufacturing Corp. receive health insurance through a group plan issued by Wellnet. During the past year, 40 percent of the employees did not file any health insurance claims, 40 percent filed only a small claim, and 20 percent filed a large claim. The small claims were spread uniformly between 0 and $2,000, whereas the large claims were spread uniformly between $2,000 and $20,000.

Based on this experience, Wellnet now is negotiating the corporation’s premium payment per employee for the upcoming year.

You are an OR analyst for the insurance carrier, and you have been assigned the task of estimating the average cost of insurance coverage for the corporation’s employees.

Follow the instructions of Prob. 22.7-4, where the size of an employee’s health insurance claim (including 0 if no claim was filed) now plays the role that the repair time for a bicycle did in Prob.