ASSIGNMENT | Business Statistics

Download and complete Homework Assignment 5 [DOCX].

The data in the table below is from a study conducted by an insurance company to determine the effect of changing the process by which insurance claims are approved. The goal was to improve policyholder satisfaction by speeding up the process and eliminating some non-value-added approval steps in the process. The response measured was the average time required to approve and mail all claims initiated in a week. The new procedure was tested for 12 weeks, and the results were compared to the process performance for the 12 weeks prior to instituting the change.

Table: Insurance Claim Approval Times (days)
Old Process Elapsed Time New Process Elapsed Time
Week Week
1 31.7 13 24
2 27 14 25.8
3 33.8 15 31
4 30 16 23.5
5 32.5 17 28.5
6 33.5 18 25.6
7 38.2 19 28.7
8 37.5 20 27.4
9 29 21 28.5
10 31.5 22 25.2
11 38.6 23 24.5
12 39.3 24 23.5
Use the date in the table above and answer the following questions in the space provided below:

What was the average effect of the process change? Did the process average increase or decrease and by how much?
Analyze the data using the regression model y = b0 + b1 x, where y = time to approve and mail a claim (weekly average), x = 0 for the old process, and x = 1 for the new process.
How does this model measure the effect of the process change?
How much did the process performance change on the average? (Hint: Compare the values of b1 and the average of new process performance minus the average of the performance of the old process.)

SAMPLE SOLUTION

1. The mean of the old process can be obtained as
   31.7+27+33.8+30+32.5+33.5+38.2+37.5+29+31.3+38.639.33)/12
   = 33.53
   The mean for the new process is given as
   (24+25.8+31+23.5+28.5+25.6+28.7+27.4+28.5+25.2+24.5+23.5)/12
   = 26.35
   The above values for the mean can be interpreted to show that the implementation of the new process as per the policyholder has reduced when compared to the old process. The reduction in the process average is 33.53 – 26.35 = 7.18
2. The regression equation….