MM 250 WU Modeling Real World Probability Discussion Response
Description
Post 2: Reply to a Classmate
Assume your team member has passed the diagram and initial setup on to you for further analysis of how the likelihood of these outcomes may affect the company in the short term. Review a classmate’s state-transition diagram and address all of the following items.
Translate the probabilities given in the diagram to a transition matrix, P. Present this as a 2 ænbsp;2 matrix.
Generate the proportion in State A versus State B after the first time period (i.e., the distribution after one step). This is also known as the state matrix after one period, S1, found by multiplying the initial distribution vector, v, given by your classmate by the transition matrix, P, you derived from their diagram (S1 = v?P). Your result for S1 should be expressed as a matrix/vector with the appropriate dimensions.
Interpret the state matrix after one period, S1, which you just computed, in your own words, using one or two sentences. In another one or two sentences, express to your team member some ideas on how the company might find this information useful.
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In my example, I would be an analyst for a streaming service, for example like Netflix. There is
a monthly subscription fee with the service, and sometimes a customer will discontinue their
subscription or use an alternative service to watch movies and tv shows.
A represents customers that are subscribed to Netflix.
B represents customers of other services/individuals that are not subscribed in general.
Having a wide variety in its selection is enticing enough for most customers to remain
subscribed, so I would say the probability of A = 70%, or 0.7
The chance that a customer would subscribe to another streaming service would then be
represented as: B = 30%, or 0.3
The likelihood of a customer changing subscriptions to Netflix is based on a variety of factors,
but for the sake of the example let’s say that B to A = 50%, or 0.5
Customers of another subscription service, or those not subscribed to any, are just as likely to
remain that way, so I will place the probability of B to B = 50%, or 0.5
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