# Modelling employee salaries with a Markov analysis

A certain firm has noticed that employees' salaries from year to year can be modeled by Markov analysis. The matrix of transition probabilities follows.

(a) Set up the matrix of transition probabilities in the form:

I 0

A B

(b) Determine the fundamental matrix for this problem.

(c) What is the probability that an employee who has received a raise will eventually quit?

(d) What is the probability that an employee who has received a raise will eventually be fired?

https://brainmass.com/math/consumer-mathematics/modelling-employee-salaries-markov-analysis-553756

#### Solution Preview

A certain firm has noticed that employees' salaries from year to year can be modeled by Markov analysis. The matrix of transition probabilities follows.

(a) Set up the matrix of transition probabilities in the form:

I 0

A B

(b) Determine the fundamental matrix for this problem.

(c) What is the probability that an employee who has received a raise will eventually quit?

(d) What is the probability that an employee who has received a raise will eventually be fired?

Salary in Next Year

Salary in Current Year Remains Unchanged Receives Raise Quits Fired

Remains Unchanged 0.2 0.4 0.3 0.1

Receives Raise 0.5 0.3 0.0 0.2

a) New state definition required: s = (A, B)

new state of definition required: s = (A, B )

A - salary in ...

#### Solution Summary

The modeling employees salaries with a Markov analysis is examined.