Quantitative Analysis for Management, 13/e

Summary

Markov analysis can be very helpful in predicting future states. The equilibrium conditions are determined to indicate how the future will look if things continue as in the past. In this chapter, the existence of absorbing states was presented, and the equilibrium conditions were determined when one or more of these were present.

However, it is important to remember that the future conditions found using Markov analysis are based on the assumption that the transition probabilities do not change. When using Markov analysis to predict market shares, as in the grocery store example, it should be noted that companies are constantly trying to change these probabilities so that their own market shares increase. This was illustrated in the ...