Decision Analytic Approach The most important managerial decision is to classify workers' claims as either high-risk or low-risk based on probability of conversion. This is necessary in order to cut costs and improve efficiency. A manager's main objective is to minimize the total cost of claims to the WCE. If the estimated probability of conversion for a claim is greater than or equal to a cuto probability P. the claim manager would classify it as a highrisk claim and intervene. If the estimated probability is lower than P. the claim manager would label it as lowrisk and not intervene. The analyst's role is to determine the value for P that will affect the possibility of classifyth a claim correctly. There are two main errors that managers wish to avoid in this process. which include umrecessary intervention and failure to intervene when it is in fact necessary. By assigning variables to each combination of intervention. conversion. and average cost. an equation was developed to calculate expected costs for an individual claim. Within probabilities. claim characteristics can vary. To determine the expected cost P for inventory claims. the developed equation must be sunnned over the distribution of claims with different characteristics