) One reason to do an audit such as this is to estimate the number of claims tha
ID: 3024303 • Letter: #
Question
) One reason to do an audit such as this is to estimate the number of claims that would not be allowed if all claims in a population were examined by experts. We have an estimate of the proportion of claims from each stratum based on our sample. With ours SRS of claims for each stratum, we have an unbiased estimate of the corresponding population proportion for each stratum. Therefore if we take the sample proportions and multiply by the population sizes, we have the estimates that we need. Here the population sizes for the three strata:
Stratum
Claims in Stratum
Small
3342
Medium
246
Large
58
a )For each stratum, estimate the total number of claims that would not be allowed if claims in the stratum had been audited.
b) Give marginal errors for your estimates (MOE). (Hint: You first need to find the Standard errors for your estimates, CH6-pg328. Then you need to use the rules for variances CH5-pg277 to find the SE for the population estimates. Finally you need to multiply by Zalpha/2 to determine the MOE. Use alpha = 0.05.
Stratum
Claims in Stratum
Small
3342
Medium
246
Large
58
Explanation / Answer
a.
Find the total population size by adding all three populations.It is 3646.
Small=3342/3646*3342=3063.35
Medium=246/3646*246=16.60
Large=58/3646*58=0.92
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