question archive You are to use simulation to analyze the medical claims Yi, i = 1, 2,
You are to use simulation to analyze the medical claims Yi, i = 1, 2,
Subject:Operations ManagementPrice:2.87 Bought7
You are to use simulation to analyze the medical claims Yi, i = 1, 2, ..., 9 of each person in a group of nine. Insurance coverage pays for the excess, if any, of each claim over $10,000. The distribution of Yi is given by P(Y = 0) = 0.10, P(Y = 100) = .80, P(Y = 50000) = .09, P(Y = 100000) = .01 You are to simulate the Y?, i = 1, 2, ..., 9 for the group using the following uniform random numbers on [0, 1]. .13,.54,93, .995, 27,89, .42,.86, .95. Determine the average amount paid by the insurance company.
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Answer:
First, define the random number ranges as follows:
| Y | P(Y) | F(Y) | RN Ranges |
| 0 | 0.100 | 0.100 | 0 - 99 |
| 100 | 0.800 | 0.900 | 100 - 899 |
| 50,000 | 0.090 | 0.990 | 900 - 989 |
| 100,000 | 0.010 | 1.000 | 990 - 999 |
Simulation:
| Run-i | RN | RN * 1000 | Y (as per the ranges defined) |
Payable (in excess of 10,000) |
| 1 | 0.130 | 130 | 100 | 0 |
| 2 | 0.540 | 540 | 100 | 0 |
| 3 | 0.930 | 930 | 50,000 | 40,000 |
| 4 | 0.995 | 995 | 100,000 | 90,000 |
| 5 | 0.270 | 270 | 100 | 0 |
| 6 | 0.890 | 890 | 100 | 0 |
| 7 | 0.420 | 420 | 100 | 0 |
| 8 | 0.860 | 860 | 100 | 0 |
| 9 | 0.950 | 950 | 50,000 | 40,000 |
| Average | $18,888.89 |
