Question: An Internet Service Provider ( ISP ) offers three plans, High Speed ( H ) , Medium Speed ( M ) and Low Speed (
An Internet Service Provider ISP offers three plans, High Speed H Medium Speed M and Low Speed L Each customer has the option of changing plan
each month, and using past data they have estimated the proportion of customers who change between plans as follows:
of those on H change to change to L
of those on M change to change to L
of those on L change to change to M
All other customers stay on the same plan.
a Construct a transition matrix such that if describes the state at time then
b If at the moment of customers are on plan on plan M and on plan L then what proportion are expected to be on each plan after month? Enter your answer as proportions not percentages in the form HML with each number accurate to decimal places.
c What are the expected proportions after months?
d Suppose the ISP buys out a competitor and all of the competitors customers are transferred to them and by default are on plan M These customers can
then change to other plans each month. Assuming that they change according to the same probabilities as the existing customers, what will be the
proportions of these new customers on each of plan after months. Enter once again in the form HML to two decimal places.
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