Question

Problem 16-09 (Algorithmic) The purchase patterns for two brands of toothpaste can be expressed as a...

Problem 16-09 (Algorithmic)

The purchase patterns for two brands of toothpaste can be expressed as a Markov process with the following transition probabilities:

To
From Special B MDA
Special B 0.95 0.05
MDA 0.25 0.75
  1. Which brand appears to have the most loyal customers?

      

    Explain.

    The input in the box below will not be graded, but may be reviewed and considered by your instructor.


  2. What are the projected market shares for the two brands? If required, round your answer to three decimal places.

    =  

    =
Math   Statistics-And-Probability   
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Homework Answers

Answer #1

a)

Special B appears to have the most loyal customers, because the transition probability of staying with Special B is 0.95, which is higher as compared to that of MDA, which is 0.75

b)

Steady-state probabilities are computed below:

Projected market share of Special B = 0.833 or 83.333 %

Projected market share of MDA = 0.167 or 16.667 %

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