1. The leading brewery on the West Coast (labeled A ) has hired an OR analyst to analyze its
market position. It is particularly concerned about its major competitor (labeled B ). The analyst
believes that brand switching can be modeled as a Markov chain using three states, with states A
and B representing customers drinking beer produced from the aforementioned breweries and
state C representing all other brands. Data are taken monthly, and the analyst has constructed the
following (one-step) transition matrix from past data. (a) What are the steady-state market shares
for the two major breweries? (b) What is the probability that a current beer A customer will be
purchasing beer B in 3 months? (c) What is the probability that a current beer B customer will be
purchasing beer A in 3 months? (d) Assume brewery A estimates its monthly profit per customer
at $14, and its potential customer base as 500,000 strong. What is the average monthly profit for
brewery A?.
1 The leading brewery on the West Coast labeled A has hi.pdf
1. 1. The leading brewery on the West Coast (labeled A ) has hired an OR analyst to analyze its
market position. It is particularly concerned about its major competitor (labeled B ). The analyst
believes that brand switching can be modeled as a Markov chain using three states, with states A
and B representing customers drinking beer produced from the aforementioned breweries and
state C representing all other brands. Data are taken monthly, and the analyst has constructed the
following (one-step) transition matrix from past data. (a) What are the steady-state market shares
for the two major breweries? (b) What is the probability that a current beer A customer will be
purchasing beer B in 3 months? (c) What is the probability that a current beer B customer will be
purchasing beer A in 3 months? (d) Assume brewery A estimates its monthly profit per customer
at $14, and its potential customer base as 500,000 strong. What is the average monthly profit for
brewery A?
