# The Statewide Auto Insurance Company developed the following probability distribution for automobile collision claims paid during the

## Question:

**Payment($)_____________________Probability**

0............................................................... 0.83

500........................................................... 0.06

1,000....................................................... 0.05

2,000........................................................ 0.02

5,000........................................................ 0.02

8,000......................................................... 0.01

10,000....................................................... 0.01

a. Set up a table of intervals of random numbers that can be used with a VLOOKUP to generate automobile collision claim payments.

b. Construct a simulation model to estimate the mean and standard deviation of claims payments. How accurate are these estimates? Compare them to the analytical calculation of the mean,

How can we improve the accuracy of the simulation estimates?

DistributionThe word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...

## Step by Step Answer:

**Related Book For**

## An Introduction to Management Science Quantitative Approach to Decision Making

**ISBN:** 978-1337406529

15th edition

**Authors:** David R. Anderson, Dennis J. Sweeney, Thomas A. Williams, Jeffrey D. Camm, James J. Cochran