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A random sample of 400 claims was taken from an HMO for the current calendar year in order in order to estimate the characteristics of

A random sample of 400 claims was taken from an HMO for the current calendar year in order in order to estimate the characteristics of the claim amounts. The results were as follows:

  1. Sample Mean = $600
  2. Sample Standard Deviation = $400

  1. Frequency Distribution of Medical Claims Amounts

FREQUENCY DISTRIBUTION

CLAIM SIZE RANGE

(dollars)

FREQUENCY

(NUMBER OF CLAIMS)

Xi 500

250

500 < Xi 1000

70

1000 < Xi 1500

50

1500 < Xi 2000

20

2000 i

10

Over the next year the insurance company expects to process 200,000 claims.

Compute a 95% confidence interval for the total amount of claims that the insurance company will process next year (in millions of dollars).

(112 , 128)

(108 , 132)

(115 , 125)

(106 , 134)

(95 , 145)

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