# Question: A company provides its three employees with health insurance under

A company provides its three employees with health insurance under a group plan. For each employee, the probability of incurring medical expenses during a year is 0.9, so the number of employees incurring medical expenses during a year has a binomial distribution with p = 0.9 and n = 3. Given that an employee incurs medical expenses during a year, the total amount for the year has the distribution $100 with probability 0.9 or $10,000 with probability 0.1. The company has a $5,000 deductible clause with the insurance company so that each year the insurance company pays the total medical expenses for the group in excess of $5,000. Use the uniform random numbers 0.01 and 0.20, in the order given, to generate the number of claims based on a binomial distribution for each of 2 years. Use the following uniform random numbers, in the order given, to generate the amount of each claim: 0.80, 0.95, 0.70, 0.96, 0.54, 0.01. Calculate the total amount that the insurance company pays for 2 years.

## Relevant Questions

Reconsider the coin flipping game introduced in Sec. 20.1 and analyzed with simulation in Figs. 20.1, 20.2, and 20.3. (a) Revise the spreadsheet model in Fig. 20.1 by using Excel’s VLOOKUP function instead of the IF ...Each time an unbiased coin is flipped three times, the probability of getting 0, 1, 2, and 3 heads is 1/8, 3/8, 3/8, and 1/8, respectively. Therefore, with eight groups of three flips each, on the average, one group will ...Jessica Williams, manager of Kitchen Appliances for the Midtown Department Store, feels that her inventory levels of stoves have been running higher than necessary. Before revising the inventory policy for stoves, she ...Now that Jennifer is in middle school, her parents have decided that they really must start saving for her college education. They have $10,000 to invest right now. Furthermore, they plan to save another $4,000 each year ...Use the mixed congruential method to generate the following sequences of random numbers. (a) A sequence of 10 one-digit random integer numbers such that xn + 1 ≡ (xn + 3) (modulo 10) and x0 = 2 (b) A sequence of eight ...Post your question