ACTIVITY

Problem 1. Markov chains (steady state):

XYZ insurance company charges its customers according to their accident

history. If you have not had accidents the last two years will be charged for
the new policy $ 1,730,000 (state 0); if you have had an accident in each of
the last two years you will be charged $ 2,280,000 (State 1); If you had
accidents the first of the last two years you will be charged $ 1,650,000
(state 2) and if you had an accident the second of the last two years will be
charged $ 1,670,000 (State 3). The historical behavior of each state is given
by the following cases of accident, taken in four different events.

ACCIDENTS IN THE YEAR

STATE E0 E1 E2 E3 TOTAL
E0 1585 1687 2156 1970 7398
E1 2100 2350 2670 1230 8350
E2 1750 1250 850 560 4410
E3 1270 1380 56 865 3571

Table 1. Historical accident data

Problem 2. Markov chains (Initial state multiplication):

In Colombia there are 5 main mobile operators such as Tigo, Comcel,

Movistar, ETB and Uff, which we will call states. The following chart
summarizes the odds that each client has to stay in their current operator or
make a change of company.

STATE TIGO COMCEL MOVISTAR ETB UFF

TIGO 0,18 0,28 0,19 0,18 0,17
COMCEL 0,21 0,23 0,17 0,25 0,14
MOVISTAR 0,19 0,16 0,23 0,26 0,16
ETB 0,18 0,19 0,23 0,21 0,19
A UFF 0,22 0,23 0,19 0,17 0,19
 Table 2. Probabilities of change and permanence in the company of

Telephony (Transition Matrix)

Problem 3. Markov chains (Initial state multiplication):

In Colombia there are 6 main mobile operators such as Avantel, Tigo,

Comcel, Movistar, ETB and Uff, which we will call states. The following chart
summarizes the odds that each client has to stay in their current operator or
make a change of company.

STATE AVANTEL TIGO COMCEL MOVISTAR ETB UFF

AVANTEL 0,22 0,15 0,17 0,15 0,19 0,12
TIGO 0,17 0,15 0,15 0,17 0,18 0,18
COMCEL 0,16 0,19 0,17 0,17 0,16 0,15
MOVISTAR 0,18 0,18 0,19 0,18 0,15 0,12
ETB 0,15 0,19 0,19 0,12 0,18 0,17
UFF 0,14 0,17 0,17 0,19 0,18 0,15

Table 3. Probabilities of change and permanence in the company of

Telephony (Transition Matrix)

Problem 4. Markov chains (Initial state multiplication):

Suppose that 4 types of soft drinks are obtained in the market: Colombian,
Pepsi Cola, Fanta and Coca Cola when a person has bought Colombian there
is a probability that they will continue to consume 40%, 20% of which will
buy Pepsi Cola, 10% that Fanta buys and 30% that Coca Cola consumes;
when the buyer currently consumes Pepsi Cola there is a probability that he
will continue to buy 30%, 20% buy Colombiana, 20% that Fanta consumes
and 30% Coca Cola; if Fanta is currently consumed, the likelihood of it
continuing to be consumed is 20%, 40% buy Colombian, 20% consume
Pepsi Cola and 20% go to Coca Cola. If you currently consume Coca Cola the
probability that it will continue to consume is 50%, 20% buy Colombian,
20% that consumes Pepsi Cola and 10% that is passed to Fanta.

At present, each Colombian brand, Pepsi Cola, Fanta and Coca Cola have the
following percentages in market share respectively (30%, 25%, 15% and
30%) during week 3.
 STATE E0 E1 E2 E3 E4 COCA
WEEK COLOMBIANA PEPSICOLA FANTA COLA
3

COLOMBIANA 0.30 0.40 0.20 0.10 0.30

PEPSI COLA 0.25 0.20 0.30 0.20 0.30

FANTA 0.15 0.40 0.20 0.20 0.20

COCA COLA 0.30 0.20 0.20 0.10 0.50

Transition matrix

1) Define the states: by extension (E1, E2, E3, E4) and by understanding:
E1 will buy Columbiana, E2 will buy Pepsi Cola, E3 will buy Fanta and E5 will
buy Coca Cola.

2) Define the rows and columns. The "permanent component" or retentions

(groups that do not change) appear as values in the main diagonal and the
"exchange component" (groups that do change) appear as losses in line
values and the gains in columns as follows:

0.40 0.20 0.10 0.30 PERMANENCE

0.20 0.30 0.20 0.30 AND GAIN
0.40 0.20 0.20 0.20
0.20 0.20 0.10 0.50

PERMANENCE
AND LOSS