3.7 An insurance company is looking to replace its legacy claims
payment system. The Technology Steering Committee is willing to
explore three alternative systems. Table EX 3.7 summarizes the cost
savings for each system under potential peak claims volumes.
Payoff: Cost Savings (in $000s) for Peak Claims
Volumes
System
5,000,000 Claims
10,000,000 Claims
15,000,000 Claims
A
35
70
105
B
(50) Take negative 50 because it is in parentheses
85
170
C
10
25
75
a. The most recent system...