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March 25th, 2017, 03:11 AM   #1
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Question Average Cost by group

Hi there,

I am having a problem and having difficulty in understand what I am doing.

If I have a number of bills, and I group the bills by size band, e.g. $100-$200, $200 - $300, and so on. I then work out the % of claims for each size band.

I then worked out the average cost by size band.

If I multiply the % of claim and the average cost by size band, what does this tell me? I know it all add up to the overall average cost. Does it tell me the cost per band how much it cost per bill? Or a large cost in one of the band has a bigger impact on the average cost?
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March 25th, 2017, 06:09 AM   #2
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Originally Posted by tvo149 View Post
e.g. $100-$200, $200 - $300, and so on.
Your problem statement is somewhat confusing.
Say you have only above 2 groups, 2 claims each:

100-200 : 100 and 101
200-300 : 299 and 300

What do you expect to "see"?
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March 25th, 2017, 06:44 AM   #3
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Your description is way too unclear to give an answer.

You say you work out the percentage of claims for each band. A percentage is a relationship between two amounts. So are some bills in a band claims and other bills in a band something other than claims? That would be comprehensible: 40% of the bills in band 300-400 are claims and 60% are not claims. In short, claims are a percent of something, but you do not tell us what that something is.

In fact, you do not tell us whether bills and claims are the same thing or two different things and, if different, what the difference is. So there is no clue whether we are talking about the average cost per bill or the average cost per claim.

Some sentences are not close to understandable English. "Does it tell me the cost per band how much it cost per bill?" The cost per band would necessarily equal the cost per bill only if bands are the same thing as bills.

If this is a problem from a class or a textbook, then please give the complete problem word for word.

If this is a problem arising from your business, what may be screamingly obvious to you will not be at all obvious to us. We will not know the vocabulary of your business until you explain it. We will not know what you want to learn from this analysis. Until you tell us clearly WHAT you are trying to learn, there is no way that we can tell you HOW to learn it. So please start at the beginning. What are claims? What are bills? What do you want to know about them? Why put them in bands?

Last edited by JeffM1; March 25th, 2017 at 06:46 AM.
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March 25th, 2017, 06:57 AM   #4
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Quote:
Originally Posted by Denis View Post
Your problem statement is somewhat confusing.
Say you have only above 2 groups, 2 claims each:

100-200 : 100 and 101
200-300 : 299 and 300

What do you expect to "see"?
Let's say there is also a bill for exactly 200. Does it go in with 100 and 101 or with 299 and 300 or with both? Or maybe it goes in neither because it is a bill, not a claim.

"Somewhat confusing" is an understatement. I tried not to be sarcastic in my previous post, but had any employee sent me a memo like that, said employee would have been immediately moved to a position that did not require competence in English.
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March 25th, 2017, 08:55 AM   #5
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..but had any employee sent me a memo like that, said employee would have been immediately moved......
...to the mail room !
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March 25th, 2017, 10:17 AM   #6
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Originally Posted by Denis View Post
...to the mail room !
That would certainly by HR's typical recommendation
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