What is the maximum cost to the company

Reference no: EM1335181

Health insurance claims

A large manufacturing company self-insures its employee health insurance claims. That is, it collects a fixed amount each month from every employee for healthcare costs, and then it pays the entire claim amount using its own funds to make up the difference. It would like to estimate its total healthcare payments for the coming year.

The total number of employees at the start of the year is 11,124. The firm expects the number of employees to change each month over the coming year by a percentage that is uniformly distributed between -2 and 5 percent. Employees contribute $125 each per month toward their healthcare costs, while the average claim is $250 per month. The average claim itself is expected to grow by an amount given by a normal distribution with a mean of 1 percent and a standard deviation of 2 percent.

a. What is the expected cost to the company of covering employee healthcare costs in the coming year?
b. What is the maximum cost to the company of covering employee healthcare costs in the coming year?
c. What is the probability that costs will not exceed $20 million?

Reference no: EM1335181

Questions Cloud

Explain important information about the marketing mix : Explain Important information about The Marketing Mix: Promotion Strategies and Assume that you are the newly hired promotion manager for Burberry and that the VP of Marketing wants you to prepare a report

Give a pseudocode and flowchart : A local department store hires you to write down an automated checkout program to expedite customers in a hurry. The checkout line can only accept 5 items for any one purchase.

Regarding continuation of strikes law : If the three strikes law is continued, will it cause future crowding problems within prisons, or should more prisons just be built?

Which of these methods of encouraging growth : Which of these methods of encouraging growth would you suggest to a newly industrialized economy,

What is the maximum cost to the company : What is the maximum cost to the company of covering employee healthcare costs in the coming year and What is the probability that costs will not exceed $20 million?

Explain about marketing mix- marketing research : Explain about Marketing mix- MARKETING RESEARCH and Describe the elements of the marketing mix

Illustrate what is the relationship between the variable : Illustrate what is the relationship between the variable that you selected and the economy. What trends do you see in the data sets.

Describing the purpose of attributes of a project : Using the concepts within the textbook "A Not-for-Profit Organization" , outline some attributes of a project, and describe their overall purpose.

Describe how the project manager will communicate : Describe how the project manager will communicate performance evaluation results to both management and the customer.

User Account

All Pages