RMI 2101 Lecture Notes - Lecture 3: Underwriting, Speedy Delivery
17 Oct 2016
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Assume that united delivery service (udp), a mail service company, has distribution centers all along the east coast. Udp uses a fleet of 700 delivery trucks in its operations dispersed among the various distribution centers. From past information the chief risk officer for udp has constructed the following probability distribution for the number of losses per truck per month. Calculate expected value of frequency per truck per month. (2 points) = # of losses of trucks per month * probability. See table: now assume that when truck losses do occur, they are non-random and always equal to , calculate the expected loss per truck per month? (2 points) = (expected value of frequency) * (cost of loss) = : calculate the expected loss for all trucks per month. (2 points) = (expected loss per truck per month) * (# of delivery trucks) 1: calculate the expected loss for all trucks for the year. (1 point)
