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Concept explainers
An insurance company has the business objective of reducing the amount of time it takes to approve for life insurance, the approval process consists of underwriting, which includes a review of the application, a medical information bureau check, possible requests for additional medical information and medical exams, and a policy compilation stage in which the policy pages are generated and sent for delivery. The ability to deliver approved policies to customer in a timely manner is critical to the profitability of this service. During a period of one month, you collect a random sample of 27 approved policies and store total processing times, in days, in insurance.
a. In the past, the
b. What assumption about the population distribution is needed in order to conduct the t test
in (a)?
c. Construct a boxplot or a normal probability plot to evaluate the assumption made in (b).
d. Do you think the assumption needed in order to conduct the t (a) valid? Explain.
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Chapter 9 Solutions
EP BASIC BUS.STATS-ACCESS (18 WEEKS)
- savings banks are permitted to sell life insurance. The approval process consists of underwriting, which includes a review of the application, a medical information bureau check, possible requests for additional medical information and medical exams, and a policy compilation stage, in which the policy pages are generated and sent to the bank for delivery. The ability to deliver approved policies to customers in a timely manner is critical to the profitability of this service to the bank. Using the DCOVA framework you define the variable of interest as the total processing time in days. You collect the data by selecting a random sample of 27 approved policies during a period of one month. You organize the data collected in a worksheet and store them in 73 19 16 64 28 28 31 90 60 56 31 56 22 18 45 48 17 17 17 91 92 63 50 51 69 16 17 a. Compute the mean, median. b. Compute the range, variance, standard deviation, and coefficient of variation. c. What would you tell a customer who enters…arrow_forwardStrubeck Corporation sponsors a pension plan for its employees. It manages part of the equity portfolio in-house and delegates management of the balance to Super Trust Company. As chief investment officer of Strubeck, you want to review the performance of the in-house and Super Trust portfolios over the last four quarters. You have arranged for outflows and inflows to the portfolios to be made at the very beginning of the quarter. The table below summarizes the inflows and outflows as well as the two portfolios’ valuations. In the table, the ending value is the portfolio’s value just prior to the cash inflow or outflow at the beginning of the quarter. The amount invested is the amount each portfolio manager is responsible for investing.Table 1: Cash Flows for the In-House Strubeck Account and the Super Trust AccountPeriod Quarters 1 2 3…arrow_forwardIf a company has excess capacity, it is contemplating whether a special order should be accepted. The order will not impact regular sales. If the company accepts the special order, what will occur? O Both fixed and variable costs will increase. Net income will increase if the special sales price per unit exceeds the unit variable costs. There are no incremental revenues. Incremental costs will not be affected.arrow_forward
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- Glenn Howell, VP of personnel for the Standard Insurance Company, has developed a new training program that is entirely self-paced. New employees work various stages at their own pace; completion occurs when the material is learned. Howell’s program has been especially effective in speeding up the training process, as an employee’s salary during training is only 67 percent of that earned upon completion of the program. In the last several years, average completion time of the program was 44 days, and the standard deviation was 12 days. a) Find the probability an employee will finish the program in 33 to 42 days?b) What is the probability of finishing the program in fewer than 30 days?c) Fewer than 25 or more than 60 days?arrow_forwardA Cake company uses 4,629 quart bottles of Chocolate sauce each year. The sauce costs 5 per bottle and is served only in full bottles for food safety purposes. The company's inventory manager calculated that each time an order is placed, it costs 13 and holding costs are 20 percent of the purchase price. Once the order is placed, it takes 3 weeks for an order to arrive. The company works for 47 weeks per year. The company is considering to use the inventory system techniques which minimizes the inventory cost. Assume that both, lead time and customer demand are variable. Customer demand's standard deviation 27 units per week and standard deviation for lead time = 1. Find out the safety stock needed to achieve 95% customer service level. =arrow_forwardUse an appropriate visual representation to show the number of customer purchases attributable to the method of payment.arrow_forward
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