You are on page 1of 14

Unit 3: Phase 6 - Solve problems by applying the algorithms of Unit 3

Enyi Carolina Villarraga – Cod: 1’016’017.017

Leidy Stella Picon- Cod: 63.541.192

Estefania Calderon Sterling- Cod: 1.032.467.087

Group Number: 212066_8

Ricardo Javier Pineda

Tutor

Universidad Nacional Abierta y a Distancia (UNAD)

Theory of Decisions

April 2018
Introduction.

This work aims to deepen the issues related to the course of Decision Theory Through
the application of different exercises using mathematical logical reasoning and the
management of different topics as it is: basic concepts and decisions under an
environment of certainty; Decisions Under an environment Risk; Decisions Under an
environment Uncertainty using matrices necessary for decisions with Markov chains.
Exercises solved according to the proposed theme

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 $
1,580,000 (state 0); if you have had an accident in each of the last two years you will be
charged $ 2,150,000 (State 1); If you had accidents the first of the last two years you
will be charged $ 1,630,000 (state 2) and if you had an accident the second of the last
two years will be charged $ 1,550,000 (State 3). The historical behavior of each state is
given by the following cases of accident, taken in four different events.

Table 1. Historical accident data

According to Table 1 by applying the Markovian processes, ie finding the transition


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

a. What is the transition matrix resulting from proportionality according to the


accident history?

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


historical accident rate?

E0 Has not had accidents in the last two years ($ 1,580,000)

E1 You have had an accident in each of the last two years ($ 2,150,000)

E2 You had accidents the first of the last two years ($ 1,630,000)

E3 You had an accident the second of the last two years ($ 1,550,000)
The historical behavior of each state is given by the following cases of accident

ACCIDENTS IN THE YEAR


STATE E0 E1 E2 E3 TOTAL
E0 2961 1974 3948 987 9870
E1 1100 3300 5500 1100 11000
E2 2500 1250 1250 7500 12500
E3 4380 0 2920 7300 14600

ACCIDENTS IN THE YEAR


STATE E0 E1 E2 E3 ∑
E0 0,3 0,2 0,4 0,1 1
E1 0,1 0,3 0,5 0,1 1
E2 0,2 0,1 0,1 0,6 1
E3 0,3 0 0,2 0,5 1

Σ
=
W
0,3 0,2 0,4 0,1 1
X p= 0,1 0,3 0,5 0,1 = 1 q= W X Y Z
Y 0,2 0,1 0,1 0,6 = 1
Z 0,3 0 0,2 0,5 = 1

p*q =

EC1 0,3W+0,1X+0,2Y+0,3Z =W

EC2 0,2W+0,3X+0,1Y+0Z =X

EC3 0,4W+0,5X+0,1Y+0,2Z =Y

EC4 0,1W+0,1X+0,6Y+0,5Z =Z

EC5 W+X+Y+Z =1
The transition matrix for a Markov chain of n states is a matrix of n x n with all non-

negative records and with the additional property that the sum of the records of each

row (or column) is equal to 1.

aw + bx + cy + dz + e = 0 Where w, x, y, z are the variables and e the

independent term equals zero (0).

EC1 0,3W-W+0,1X+0,2Y+0,3Z =0
EC2 0,2W+0,3X-X+0,1Y+0Z =0
EC3 0,4W+0,5X+0,1Y-Y+0,2Z =0
EC4 0,1W+0,1X+0,6Y+0,5Z-Z =0
EC5 W+X+Y+Z-1 =0

EC1 -0,7W+0,1X+0,2Y+0,3Z = 0
EC2 0,2W-0,7X+0,1Y =0
EC3 0,4W+0,5X-0,9Y+0,2Z =0
EC4 0,1W+0,1X+0,6Y-0,5Z =0
EC5 W+X+Y+Z-1 =0

E0 E1 E2 E3
W X Y Z
0,25247525 0,10891089 0,25742574 0,38118812

COEFFICIENTS
W X Y Z INDEPENDENT
-1 0,1 0,2 0,3 0
0,2 -1 0,1 0 0
0,4 0,5 -1 0,2 0
0,1 0,1 0,6 -1 0
1 1 1 1 -1

EQUAL TO
3E-17
-2E-17
1E-16
-6E-17
0E+00

The average premium paid in the company XYZ is 0,2524 ($ 1'580.000) + 0,1089 ($

2,150,000) + 0,2574 ($ 1,630,000) + 0,3811($ 1,550,000) = 1'643.515

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
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)

The current percentages of each operator in the current market are for Tigo 0.25 for
Comcel 0.2, for Movistar 0.3, for ETB 0.1 and 0.15 for Uff (initial state).

According to Tables 2 and 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 next
period.

TRANSITION MATRIX
COMCE MOVISTA
STATE TIGO L R ETB UFF SUM
E1
TIGO 0,18 0,28 0,19 0,18 0,17 1
COMCEL 0,21 0,23 0,17 0,25 0,14 1
MOVISTA
R 0,19 0,16 0,23 0,26 0,16 1
ETB 0,18 0,19 0,23 0,21 0,19 1
UFF 0,22 0,23 0,19 0,17 0,19 1

STATE TIGO COMCEL MOVISTAR ETB UFF


TIGO 0,20 0,22 0,20 0,22 0,17
COMCEL 0,19 0,22 0,20 0,22 0,17
E2
MOVISTAR 0,19 0,21 0,21 0,22 0,17
ETB 0,20 0,21 0,20 0,22 0,17
UFF 0,20 0,22 0,20 0,21 0,17

STATE TIGO COMCEL MOVISTAR ETB UFF


TIGO 0,20 0,22 0,20 0,22 0,17
COMCEL 0,20 0,22 0,20 0,22 0,17
E3
MOVISTAR 0,20 0,22 0,20 0,22 0,17
ETB 0,20 0,22 0,20 0,22 0,17
UFF 0,20 0,22 0,20 0,22 0,17

INITIAL STATE
TIGO COMCEL MOVISTAR ETB UFF SUM
EI 0,25 0,2 0,3 0,1 0,15 1

TIGO COMCEL MOVISTAR ETB UFF SUM


P1
PROBABILITY FOR THE 3 PERIODS

0,20 0,22 0,20 0,22 0,17 1

TIGO COMCEL MOVISTAR ETB UFF SUM


P2
0,20 0,22 0,20 0,22 0,17 1

TIGO COMCEL MOVISTAR ETB UFF SUM


P3
0,20 0,22 0,20 0,22 0,17 1

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 0,19 0,18 0,17 0,15 0,19 0,12
TIGO 0,17 0,15 0,16 0,16 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 0,16 0,19 0,15 0,18 0,17
UFF 0,15 0,16 0,17 0,19 0,18 0,15

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


Telephony (Transition Matrix)

The current percentages of each operator in the current market are for Avantel 0.1, Tigo
0.15 for Comcel 0.15, for Movistar 0.35, for ETB 0.1 and 0.15 for Uff (initial state).

According to Tables 2 and 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 next
period.

1 2 3 4 5 6
STATE AVANTEL TIGO COMCEL MOVISTAR ETB UFF
1 AVANTEL 0,19 0,18 0,17 0,15 0,19 0,12
2 TIGO 0,17 0,15 0,16 0,16 0,18 0,18
3 COMCEL 0,16 0,19 0,17 0,17 0,16 0,15
4 MOVISTAR 0,18 0,18 0,19 0,18 0,15 0,12
5 ETB 0,15 0,16 0,19 0,15 0,18 0,17
6 UFF 0,15 0,16 0,17 0,19 0,18 0,15

State 0 or Initial State

1 2 3 4 5 6
AVANTEL TIGO COMCEL MOVISTAR ETB UFF
1 0,1 0,15 0,15 0,35 0,1 0,15

1 2 3 4 5 6
MATRIZ 1 STATE AVANTEL TIGO COMCEL MOVISTAR ETB UFF
1 AVANTEL 0,19 0,18 0,17 0,15 0,19 0,12
2 TIGO 0,17 0,15 0,16 0,16 0,18 0,18
3 COMCEL 0,16 0,19 0,17 0,17 0,16 0,15
4 MOVISTAR 0,18 0,18 0,19 0,18 0,15 0,12
5 ETB 0,15 0,16 0,19 0,15 0,18 0,17
6 UFF 0,15 0,16 0,17 0,19 0,18 0,15

1 2 3 4 5 6
MATRIZ 2
AVANTEL TIGO COMCEL MOVISTAR ETB UFF
1 0,1 0,15 0,15 0,35 0,1 0,15

AVANTEL TIGO COMCEL MOVISTAR ETB UFF SUM


STATE 1
0,169 0,172 0,1775 0,171 0,1675 0,143 1

MATRIZ 3 AVANTEL TIGO COMCEL MOVISTAR ETB UFF


0,169 0,172 0,1775 0,171 0,1675 0,143

AVANTEL TIGO COMCEL MOVISTAR ETB UFF SUM


STATE 2
0,167105 0,170405 0,17505 0,16612 0,17301 0,14831 1

MATRIZ 4 AVANTEL TIGO COMCEL MOVISTAR ETB UFF


0,167105 0,170405 0,17505 0,16612 0,17301 0,14831

AVANTEL TIGO COMCEL MOVISTAR ETB UFF SUM


STATE 3
0,1668264 0,17021195 0,17507855 0,16612105 0,17318645 0,1485756 1

STATE AVANTEL TIGO COMCEL MOVISTAR ETB UFF


AVANTEL 0,19 0,18 0,17 0,15 0,19 0,12
TIGO 0,17 0,15 0,16 0,16 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 0,16 0,19 0,15 0,18 0,17
UFF 0,15 0,16 0,17 0,19 0,18 0,15

STATE AVANTEL TIGO COMCEL MOVISTAR ETB UFF


AVANTEL 0,19 0,18 0,17 0,15 0,19 0,12
TIGO 0,17 0,15 0,16 0,16 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 0,16 0,19 0,15 0,18 0,17
UFF 0,15 0,16 0,17 0,19 0,18 0,15

the probabilities that each user remains in the mobile phone company during the
next period are:

P1 0,169 0,172 0,1775 0,171 0,1675 0,143

P2 0,167105 0,170405 0,17505 0,16612 0,17301 0,14831

P3 0,1668264 0,17021195 0,17507855 0,16612105 0,17318645 0,1485756

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.

According to the data of problem 4 and 5 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 transition matrix.


b. Find the probability that each user stays with the mark or change to another for
period 4 (problem 4) and period 5 (problem 5).

Problem 5. Markov chains (Initial state multiplication):

Suppose you get 6 types of Jeans brands in the Colombian market: Brand 1, Brand 2,
Brand 3, Brand 4, Brand 5 and Brand 6. The following table shows the odds that you
continue to use the same brand or change it.
STATE BRAND 1 BRAND 2 BRAND 3 BRAND 4 BRAND 5 BRAND 6
BRAND 1 0,18 0,18 0,19 0,15 0,15 0,15
BRAND 2 0,15 0,18 0,15 0,15 0,18 0,19
BRAND 3 0,19 0,17 0,18 0,18 0,15 0,13
BRAND 4 0,16 0,16 0,15 0,19 0,17 0,17
BRAND 5 0,19 0,19 0,17 0,16 0,16 0,13
BRAND 6 0,17 0,2 0,18 0,2 0,15 0,19

Table 4. Probabilities of change and permanence in the brand

At present, brand, have the following percentages in market share respectively (19%,
18%, 17%, 15%, 19% y 12%) during week 4.

According to the data of problem 4 and 5 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 transition matrix.


b. Find the probability that each user stays with the mark or change to another for
period 4 (problem 4) and period 5 (problem 5).
Screen shots solution exercises with the WinQSB or Solver that performed in the

practical learning environment.


Conclusions
Bibliography

- Dynkin, E. (1982). Markov Processes and Related Problems of Analysis: Oxford,


UK: Mathematical Institute Editorial. Retrieved from
http://bibliotecavirtual.unad.edu.co:2048/login?url=http://search.ebscohost.com/lo
gin.aspx?direct=true&db=e000xww&AN=552478&lang=es&site=ehost-live

- Ibe, O. (2013). Markov Processes for Stochastic Modeling: Massachusetts, USA:


University of Massachusetts Editorial. Retrieved from
http://bibliotecavirtual.unad.edu.co:2051/login.aspx?direct=true&db=nlebk&AN=5
16132&lang=es&site=eds-live

You might also like