An Introduction to Management Science 13th Edition by David Anderson,Dennis Sweeney ,Thomas Williams ,Jeffrey Camm, Kipp Martin

Exercise 12

The KLM Christmas Tree Farm owns a plot of land with 5000 evergreen trees. Each year KLM allows retailers of Christmas trees to select and cut trees for sale to individual customers. KLM protects small trees (usually less than 4 feet tall) so that they will be available for sale in future years. Currently, 1500 trees are classified as protected trees, while the remaining 3500 are available for cutting. However, even though a tree is available for cutting in a given year, it may not be selected for cutting until future years. Most trees not cut in a given year live until the next year, but some diseased trees are lost every year.
In viewing the KLM Christmas tree operation as a Markov process with yearly periods, we define the following four states:
State 1. Cut and sold
State 2. Lost to disease
State 3. Too small for cutting
State 4. Available for cutting but not cut and sold
The following transition matrix is appropriate:
How many of the farm's 5000 trees will be sold eventually, and how many will be lost?