MFE ASSIGNMENT-2 (CO-3)

Dear Students go through this link and solve Assignment Problems:

https://www.youtube.com/watch?v=1UwUhhS1zdM

1. A city is served by two cable TV companies, Best TV and Cable cast. Due to aggressive
sales tactics, each year 40% of Best TV customers switch to Cable cast and the other 60%
of Best TV customers stay with Best TV. On the other hand, 30% of the Cable cast switch
to Best TV.
i. Express the information as a transition probability matrix.
ii. Suppose that this year ¼ of customers switch to Best TV and ¾ customers
subscribe to Cable cast. After one year, two years and in the long run what
percentage of customers subscribe to each company?
2. Consider a bike share problem with only 3 stations: A, B, C. Suppose that all bikes must
be returned to the station at the end of the day, so that all the bikes are at some station.
Each day, the distribution of bikes at each station changes, as the bikes get returned to
different stations from where they are borrowed. Of the bikes borrowed from station A,
30% are returned to station A, 50% end up at station B, and 20% end up at station C. Of
the bikes borrowed from station B, 10% end up at station A, 60% of have been returned to
of the bikes borrowed from station C, 10% end up at station A, 10% end up at station B,
and 80% are returned to station C.
i. Express this information as a transition probability matrix and determine the
probabilities of bike being at a particular station after two days.
ii. suppose when we start observing the bike share program, 30% of the bikes are at
station A, 45% of the bikes are at station B and 25% are at station C, determine
the distribution of bikes at the end of the next day and after two days.
 ( )
3 1
0
4 4
1 1 1
3. The transition probability matrix of a Markov chain with states 0,1,2 is P =
4 2 4
3 1
0
4 4

1
and the initial state distribution of the chain is P( X 0=i) i) = ,i = 0,1,2. Find (i) P( X 2 =2)
3
and (ii) P( X 2 =2, X 1 =1, X 0=2).
4. In an industry the production of a certain product is regulated according to its existing
stock at the end of the day. Namely, if there exist unsatisfied orders or the stock is zero,
then the production of the next day covers the unsatisfied orders plus two more metric
units (m.u.). On the contrary, if there exists a non-zero stock, there is no production P ( x 0
=i) for the next day. We further know that the consumers’ demand for the product is either
1 m.u. per day with probability 60%, or 2 m. u. per day with probability 40%. Calculate
the probability to have unsatisfied orders in the long run.