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March 20th, 2014, 03:17 AM  #1 
Newbie Joined: Nov 2013 Posts: 2 Thanks: 0  Markov Probability Matriv
This is a question that I have for an assignment. I am struck to how to solve it, attached is a spreadsheet that I have used to try and solve it but I think that I am doing it wrong!!! S1: New tyres S2: Lightly worn S3: Moderately worn S4: Threadbare If the company decides to replace a tyre during inspection it costs €30 in labour per tyre. If however the tyre fails in use then the cost of replacing the tyre is estimated at €50. Based on past inspections the following transition matrix applies between one inspection and the next. State 1 2 3 4 1 0 0.9 0.1 0 State 2 0 0.6 0.3 0.1 3 0 0 0.7 0.3 The current policy is only replacing the tyres when they are in State 4. Should the company adopt a policy of replacing all tyres found in State 3 or worse on inspection? 

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markov, matriv, probability 
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