Operations Research Models and Methods / Computation

Markov Process

Economic Analysis

The Economics worksheet is automatically constructed when a rate matrix is defined. It allows the specification of values associated with residing in a state and moving to a new state. The state values are defined by value rates per unit time and the transition values are fixed values that occur whenever a transition is made. Assuming each customer experiences a cost proportional to the time spent in the foyer, we select a cost per minute equal to the number in the system. The time dimension of the cost rates are the same as the dimension used for rates in the rate matrix.

We provide the discount rate for problems in which the net present value is a relevant measure. Present value computations use continuous compounding. Again the discount rate has the same time dimensions as the transition rates.

Steady State Analysis

Operations Research Models and Methods
by Paul A. Jensen and Jon Bard, University of Texas, Copyright by the Authors