Presentation On Sequential planning

and Markov Analysis

Presented by-
Harsha Chaudhary
Riya Simon
Sakshi Chaudhary
(MBA 1st year)
Markov Chain Model
Introduction
Markov Chain

 Markov chain is a random process

that undergoes transitions from one
state to another.
 Based on the principle
‘Memorylessness’
 Describes a sequence of possible
events in which the probability of
each event depends only on the state
attained in the previous event.

 Markov chain is a simple concept which can explain
most complicated real time processes

 .Speech recognition, Text identifiers, Path

recognition and many other Artificial intelligence
tools use this simple principle called Markov chain
in some form.

 Markov chain is based on a principle of

“memorylessness”. In other words the next state
of the process only depends on the previous state
and not the sequence of states.

 This simple assumption makes the calculation of

Application of Markov Analysis in Business
Analytics
Markov analysis has come to be used as a
marketing research tool for examining and
forecasting the frequency with which
customers will remain loyal to one brand or
switch to others.

It is generally assumed that customers do not

shift from one brand to another at random, but
instead will choose to buy brands in the future
that reflect their choices in the past.
Other applications that have been found for Markov Analysis
include the following models:

 A model for manpower planning,

 A model for human needs,

 A model for assessing the behaviour of

stock prices,

 A model for scheduling hospital

admissions,

 A model for analyzing internal manpower

supply etc.
 Business Case Study
Coke and Pepsi are the only companies in
country X. A soda company wants to tie up
with one of these competitor. They hire a
market research company to find which of
the brand will have a higher market share
after 1 month. Currently, Pepsi owns 55%
and Coke owns 45% of market share.
Following are the conclusions drawn out by the market research company:

• Probability of a customer staying with brand Pepsi over a

month =0.7
• Probability of a customer switching from Pepsi to Coke over
a month =0.3
• Probability of a customer staying with the brand Coke= 0.9
• Probability of a costumer switching from Coke to Pepsi=0.1
• We can clearly see customer tend to stick with Coke but
Coke currently has a lower wallet share. Hence, we cannot
be sure on the recommendation without making some
transition calculations.
Transition Diagram
Now, if we want to calculate the market share after a
month, we need to do following calculations:
Current State X Transition Matrix = Final State

As we can see clearly see that Pepsi, although has a

higher market share now, will have a lower market
share after one month. This simple calculation is
called Markov chain.
DEFINATION OF SEQUENTIAL PLANING

A sequential planning is a list of planning functions and

parameter groups that are processed in the order you have
previously determined. You use this function to automate the
sequential processing of a user-defined number of planning
functions that you have defined. This is useful if you want to
regularly carry out certain complex operations on your data.
You can combine multiple function call-ups in a planning
sequence and these are then processed as one single step.

The benefit of sequential planning becomes greater the more

processing steps are required to complete a planning task.
The unique definition of a planning sequence ensures that all
USE OF SEQUENTIAL PLANNING

This function plans the sequence in which you

produce the planned orders on your production line
for one planning period in each case and according to
a certain planning procedure. The system carries out
sequence planning each time sequencing is invoked.
If you have inserted sort buffers between two line
segments, the sequence of the orders in the line
segments may change. In the line hierarchy, you can
choose different procedure profiles for separate
sublines separated by sort buffers. The settings in
Line Design have take priority over the settings in
EXAMPLE OF SEQUENTIAL PALNNNING
In this example, the duration of the dispatching period is one
day. The system determines all the planned orders whose
order start dates lie on this particular day and assigns them
to this day. Then the system plans the sequence of these
planned orders using the first-in-first-out process.

In this example, the duration of the dispatching period is two

days. Therefore, for sequencing, the system determines all
planned orders whose order start date lies within 2 days and
dispatches these planned orders using the FIFO process.
Here, the orders are dispatched as early as possible. If there
is sufficient time to dispatch all the planned orders to the
 k y ou
T h an