My Math Forum Markov Probability Matriv

March 20th, 2014, 03:17 AM   #1
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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

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?
Attached Files
 Questionnr6.xlsx (10.9 KB, 0 views)

 Tags markov, matriv, probability

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