Great Insurance company has collected the data regarding the duration (how long it takes) to settle insurance claims. The data collected indicate that the duration follows a normal distribution with mean 28 days and standard deviation 8 days. What proportion of the duration is between 20 and 40 days old? What proportion of the duration is less than 30 days old? What is the number of days in which 75% of all claims are above?
Continuous Probability Distributions
Probability distributions are of two types, which are continuous probability distributions and discrete probability distributions. A continuous probability distribution contains an infinite number of values. For example, if time is infinite: you could count from 0 to a trillion seconds, billion seconds, so on indefinitely. A discrete probability distribution consists of only a countable set of possible values.
Normal Distribution
Suppose we had to design a bathroom weighing scale, how would we decide what should be the range of the weighing machine? Would we take the highest recorded human weight in history and use that as the upper limit for our weighing scale? This may not be a great idea as the sensitivity of the scale would get reduced if the range is too large. At the same time, if we keep the upper limit too low, it may not be usable for a large percentage of the population!
Great Insurance company has collected the data regarding the duration (how long it takes) to settle insurance claims. The data collected indicate that the duration follows a
- What proportion of the duration is between 20 and 40 days old?
- What proportion of the duration is less than 30 days old?
- What is the number of days in which 75% of all claims are above?
Step by step
Solved in 3 steps
