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UDP has one major competitor on the East Coast, Speedy Delivery (SD). SD has similar operations and services as does UDP. SD has a smaller

UDP has one major competitor on the East Coast, Speedy Delivery (SD). SD has similar operations and services as does UDP. SD has a smaller also has a fleet of 500 trucks. From past information SD has collected the following data for the number of losses per truck per month

# of losses per truck per month # of trucks having these losses

0

70
1 90
2 130
3 160
4

??

a. As a new hire in SDs risk management department, you are asked to derive the probability distribution for frequency based on the information provided above.

b. Calculate the expected value of frequency per truck per month.

c. Now you are looking at the data from UDP and SD. You would like to know which company faces the most risk in regard to the frequency calculation? You must prove it statistically just guessing the correct one will not be marked correct

From past information, SD has constructed the following distribution related to dollar amount of losses when accidents do occur.

$ amount of losses Probability of dollar loss
200 0.40
500 0.30
1500 0.25
3000 0.05

d. Calculate the expected value of severity for SD. (3 points)

e. Calculate the expected loss per truck per month for SD. (3 points)

Please answer A-E

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