Question: Problem 3 (10 points) A computer manufacturer is so certain of its quality control that it offers a complete replacement warranty if the computer fails

Problem 3 (10 points) A computer manufacturer is

Problem 3 (10 points) A computer manufacturer is so certain of its quality control that it offers a complete replacement warranty if the computer fails within 2 years. Based upon compiled data, the company notes that there is a 2 percent chance that its computer will fail during the first year and a 10 percent chance that a computer that survives the first year fails during the second year. The warranty does not cover replacement computers. Formulate the evolution of the status of the computer as a Markov Chain whose states include two absorption states that involve needing to honor the warranty or having the computer survive the warranty period. Construct the transition probability matrix and draw the transition probability diagram

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