Exercise 1.

Markov chains (steady state):XYZ insurance company char

If you have not had accidents the last two years will be charged for th
accident in each of the last two years you will be charged $ 719,000 (S
years you will be charged $ 517.000 (state 2) and if you had an accide
778.000 (State 3). The historical behavior of each state is given by th
events.

Estado E0 E1 E2 E3
E0 1230 820 1025 1025
E1 990 1155 495 660
E2 1125 1575 1800 0
E3 780 780 1300 2340

According to Table 1 by applying the Markovian processes, finding

transition matrix and solving the respective equations of p * q, where
transition matrix and q the vector [W X Y Z]. Answer:

a.   What is the transition matrix resulting from proportionality according

accident history?

b.   What is the average premium paid by a customer in Payoff, according to

accident rate?

Estado E0 E1 E2 E3
E0 0.3 0.2 0.25 0.25
E1 0.3 0.35 0.15 0.2
E2 0.25 0.35 0.4 0
 E3 0.15 0.15 0.25 0.45

w 0.3 0.2 0.25 0.25

x 0.3 0.35 0.15 0.2
y P= 0.25 0.35 0.4 0
z 0.15 0.15 0.25 0.45

EC1 0,3W -W + 0,3X + 0,25Y + 0,15Z = 0

EC2 0,2W + 0,35X - X + 0,35Y + 0,15Z = 0
EC3 0,25W + 0,15 + 0,4Y -Y + 0,25Z = 0
EC4 0,25X + 0,2X + 0Y + 0,45Z - Z = 0
EC5 W+X+Y+Z-1=0

EC1 0,7W+ 0,3X + 0,25Y + 0,15Z = 0

EC2 0,2W + 0,65X + 0,35Y + 0,15Z = 0
EC3 0,25W + 0,15 -0,6Y + 0,25Z = 0
EC4 0,25X + 0,2X + 0Y - 0,55Z = 0
EC5 W+X+Y+Z-1=0
 insurance company charges its customers according to their accident history.
ars will be charged for the new policy $ 530,000 (state 0); if you have had an
be charged $ 719,000 (State 1); If you had accidents the first of the last two
) and if you had an accident the second of the last two years will be charged $
each state is given by the following cases of accident, taken in four different
events.

Total
4100
3300
4500
5200

kovian processes, finding the

equations of p * q, where p is the
r [W X Y Z]. Answer:

m proportionality according to the

y?

mer in Payoff, according to historical

?

SUMATORIA
1
1
1
1

1 EC1
1 EC2
1 Q ( W X Y Z ) EC3
1 EC4
EC5

E0 E1 E2 E3
W X Y Z
0 0 0 0

COEFICIENTES
W X Y Z
0.7 0.3 0.25 0.15
0.2 0.65 0.35 0.15
0.25 0.15 -0.6 0.25
0.25 0.2 0 -0.55
1 1 1 1
 P*Q

0,3W + 0,3X + 0,25Y + 0,15Z = W

0,2W + 0,35X + 0,35Y + 0,15Z = X
0,25W + 0,15 + 0,4Y + 0,25Z = Y
0,25X + 0,2X + 0Y + 0,45Z = Z
W+X+Y+Z=1

IGUAL A
INDEP 0
0 0
0 0
0 0
0 0
-1 0
In Colombia there are 5 main mobile operators such as Tigo, Comcel, Movistar, ETB and Uff, which we will call st
The following chart summarizes the odds that each client has to stay in their current operator or make a chang
company.

The current percentages of each operator in the current market are for Tigo 0.2 for Comcel
0.3, for Movistar 0.3, for ETB 0.1 and 0.1 for Uff (initial state).

According to Table 2 by applying the Markovian criteria, solve the multiplication of the initial state vector (marke

a. Find the probability that each user stays with the mobile company for the 3 next periods.

STATE TIGO COMCEL MOVISTAR ETB UFF SUMATORIA

TIGO 0.25 0.15 0.35 0.1 0.15 1
COMCEL 0.2 0.35 0.15 0.1 0.2 1
MOVISTAR 0.35 0.2 0.2 0.2 0.05 1
ETB 0.15 0.25 0.05 0.25 0.3 1
UFF 0.15 0.25 0.3 0.15 0.15 1

ESTADO INICIAL
TIGO COMCEL MOVISTAR ETB UFF
0.2 0.3 0.3 0.1 0.1

ESTADO INICIAL P1
TIGO COMCEL MOVISTAR ETB UFF
0.535 0.645 0.675 0.455 0.49

ESTADO INICIAL P2
TIGO COMCEL MOVISTAR ETB UFF
1.214 1.3315 1.2775 1.0305 1.0865

ESTADO INICIAL P3
TIGO COMCEL MOVISTAR ETB UFF
2.476025 2.588575 2.432075 2.102625 2.1967
 ESTADO INICIAL P4
TIGO COMCEL MOVISTAR ETB UFF
4.8250075 4.9352375 4.5771975 4.09779 4.2648675

ESTADO INICIAL P5
TIGO COMCEL MOVISTAR ETB UFF
9.198213 9.30308713 8.57172163 7.81202588 8.11508238

ESTADO ESTABLE
TIGO COMCEL MOVISTAR ETB UFF
17.3398005 17.4349544 16.008211 14.7268696 15.2831464
ETB and Uff, which we will call states.
rrent operator or make a change of

of the initial state vector (market share) by the probability matrix (transition matrix). Answer:

xt periods.

UMATORIA
 In Colombia there are 6 main mobile operators such as Avantel, Tigo, Comcel, Movistar, ETB and Uff, which we
following chart summarizes the odds that each client has to stay in their current operator or make a chang

The current percentages of each operator in the current market are for Tigo 0.1 for Comcel 0.2, for
Movistar 0.3, for ETB 0.1, Avantel 0.1 and 0.2 for Uff (initial state).

According to Table 3 by applying the Markovian criteria, solve the multiplication of the initial state vector
(market share) by the probability matrix (transition matrix). Answer:

a. Find the probability that each user stays with the mobile company for the nexts 4 periods.

STATE TIGO COMCEL MOVISTAR ETB AVANTEL UFF

TIGO 0.1 0.2 0.4 0.1 0.1 0.1
COMCEL 0.1 0.2 0.1 0.2 0.3 0.1
MOVISTAR 0.1 0.3 0.2 0.2 0.2 0
ETB 0.1 0.3 0.2 0.1 0.1 0.2
AVANTEL 0.1 0.15 0.35 0.1 0.1 0.2
UFF 0.1 0.2 0.2 0.3 0 0.2

ESTADO INICIAL
TIGO COMCEL MOVISTAR ETB AVANTEL UFF
0.1 0.2 0.3 0.1 0.1 0.2

ESTADO INICIAL P1
TIGO COMCEL MOVISTAR ETB AVANTEL UFF
0.29 0.49 0.52 0.53 0.26 0.41

ESTADO INICIAL P2
TIGO COMCEL MOVISTAR ETB AVANTEL UFF
0.611 0.9905 1.0395 0.916 0.668 0.725

ESTADO INICIAL P3
TIGO COMCEL MOVISTAR ETB AVANTEL UFF
1.1449 1.80095 1.8817 1.54045 1.3444 1.2926
 ESTADO INICIAL P4
TIGO COMCEL MOVISTAR ETB AVANTEL UFF
2.03091 3.140775 3.28283 2.573125 2.461295 2.240565

ESTADO INICIAL P5
TIGO COMCEL MOVISTAR ETB AVANTEL UFF
3.500769 5.36204175 5.60658475 4.2863645 4.3146475 3.8136425

ESTADO ESTABLE
TIGO COMCEL MOVISTAR ETB AVANTEL UFF
5.9390971 9.04684428 9.46122145 7.12839203 7.3890505 6.42328965
Movistar, ETB and Uff, which we will call states. The
urrent operator or make a change of company.

0.1 for Comcel 0.2, for

state).

n of the initial state vector

nswer:

s 4 periods.

SUMATORIA
1
1
1
1
1
1
 Suppose that 4 types of soft drinks are obtained in the market: Colombian, Pepsi Cola, Fanta and Coca Cola w
Colombian there is a probability that they will continue to consume 40%, 20% of which will buy Pepsi Cola, 10% t
Coca Cola consumes; when the buyer currently consumes Pepsi Cola there is a probability that he will contin
Colombian, 20% that Fanta consumes and 30% Coca Cola; if Fanta is currently consumed, the likelihood of it co
20%, 40% buy Colombian, 20% consume Pepsi Cola and 20% go to Coca Cola. If you currently consume Coca Co
continue to consume is 50%, 20% buy Colombian, 20% that consumes Pepsi Cola and 10% that is p

At present, each Colombian brand, Pepsi Cola, Fanta and Coca Cola have the following percentages in market sha
respectively (30%, 20%, 10% and 40%) during week 3.

According to the data by applying the Markovian criteria, solve the multiplication of the initial state vector (mark
share) by the probability matrix (transition matrix). Answer:

a. Find the transition matrix.

b. Find the probability that each user stays with the mark or change to another for periodS 4, 5, 6 and period 7.

COLOMBIANA PEPSI FANTA COCACOLA

COLOMBIANA 0.40 0.20 0.10 0.30
PEPSI 0.20 0.30 0.20 0.30
FANTA 0.40 0.20 0.20 0.20
COCACOLA 0.20 0.20 0.10 0.50

COLOMBIANA PEPSI FANTA COCACOLA

COLOMBIANA 0.30 0.22 0.13 0.35
PEPSI 0.28 0.23 0.15 0.34
FANTA 0.32 0.22 0.14 0.32
COCACOLA 0.26 0.22 0.13 0.39

S0 0.30 0.25 0.15 0.30

S1 0.29 0.225 0.14 0.345
S2 0.286 0.2225 0.137 0.355
S3 0.2845 0.22225 0.136 0.357
S4 0.284 0.222 0.136 0.358
 , Pepsi Cola, Fanta and Coca Cola when a person has bought
of which will buy Pepsi Cola, 10% that Fanta buys and 30% that
e is a probability that he will continue to buy 30%, 20% buy
ly consumed, the likelihood of it continuing to be consumed is
. If you currently consume Coca Cola the probability that it will
sumes Pepsi Cola and 10% that is passed to Fanta

ollowing percentages in market share

week 3.

tion of the initial state vector (market

. Answer:

r for periodS 4, 5, 6 and period 7.

 Suppose you get 6 types of Jeans brands in the Colombian market: Brand 1, Brand 2, Brand 3, Brand 4, Brand 5 a
following table shows the odds that you continue to use the same brand or change it.

At present, brand, have the following percentages in market share respectively (20%, 15%, 17%, 15%, 13% y 20%

According to the data by applying the Markovian criteria, solve the multiplication of the initial state vector (mark
probability matrix (transition matrix). Answer:

a. Find the transition matrix.

b. Find the probability that each user stays with the mark or change to another for periodS 4, 5, 6 and period 7.

ESTADO INICIAL
BRAND 1 BRAND 2 BRAND 3 BRAND 4 BRAND 5 BRAND 6
20% 15% 17% 15% 13% 20%

Estado BRAND 1 BRAND 2 BRAND 3 BRAND 4 BRAND 5

BRAND 1 0.18 0.18 0.15 0.21 0.18
BRAND 2 0.14 0.18 0.2 0.19 0.15
BRAND 3 0.13 0.16 0.15 0.21 0.2
BRAND 4 0.22 0.16 0.18 0.2 0.18
BRAND 5 0.15 0.17 0.15 0.17 0.15
BRAND 6 0.17 0.15 0.17 0.19 0.19

Estado inicial 20% 15% 17% 15% 13%

P1 0.1656 0.1663 0.166 0.1963 0.177

P2 0.1663 0.16712 0.16678 0.19528 0.17431
P3 0.16629 0.16714 0.16686 0.19517 0.17444
Estado estable 0.16628 0.16715 0.16685 0.19517 0.17443
and 2, Brand 3, Brand 4, Brand 5 and Brand 6. The
the same brand or change it.

(20%, 15%, 17%, 15%, 13% y 20%) during week 4.

on of the initial state vector (market share) by the

for periodS 4, 5, 6 and period 7.

BRAND 6
0.1 1
0.14 1
0.15 1
0.06 1
0.21 1
0.13 1

20%

0.1288
0.13043
0.13032
0.13034