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Please solve this using @RISK: A large manufacturing company self - insures its employee health insurance claims. That is , it collects a fixed amount
Please solve this using @RISK:
A large manufacturing company selfinsures
its employee health insurance claims. That is it collects a fixed
amount each month from every employee for health care costs
and then it pays the entire claim amounts using its own funds to
make up the difference. It would like to estimate its total health
care payments for the coming year.
The total number of employees at the start of the year is
The firm expects the number of employees to change
each month over the coming year by a percentage that is
uniformly distributed between percent and percent.
Employees contribute $ each per month toward their
health care costs, while the average claim is $ per month.
The average claim itself is expected to grow by an amount
given by a normal distribution with a mean of percent and a
standard deviation of percent.
a What is the expected cost to the company of covering
employee health care costs in the coming year?
b What is the maximum cost to the company of covering
employee health care costs in the coming year?
c What is the probability that costs will not exceed $ million?
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