Bill Jonson has bought a VCR from Jim's Videotape Service at a cost of $300. He now has the option of buying an extended service warranty offering 5 years of coverage for $100. After talking to friends and reading reports, Bill believes the following maintenance expenses could be incurred during the next five years.
Steven T. Opsine, supervisor of traffic signals for the Fairfax Company division of the Virginia State Highway Administration, must decide whether to install a traffic light at the reportedly dangerous intersection of Dolley Madison Blvd. and Lewisville Rd. Toward this end, Mr. Opsine has collected data on accidents at the intersection.
S.H.A. policy is to install a trafic light at an intersection at which the monthly expected number of accidents is higher than 7. According to this criterion, should Mr. Opsine recommend that a traffic light be installed at this intersection?
Alan Sarkid is the president of the Dinsdale Insurance Company and he is concerned about the high cost of claims that take a long time to settle. Consequently, he has asked his chief actuary, Dr. Ivan Acke, to analyze the distribution of time until settlement. Dr. Acke has presented him with the following graph.