A water distribution company in southern California gets its water supply from the north and sell it back to its customers in Orange county. Assume the following simplified scheme: 3 MG (millions of gallons) of water arrives from the north at the beginning of the month. The company can store up to 4 MG. If it has any excess beyond that, it sells it immediately to another distributor for agricultural usage. The monthly usage in Orange county varies randomly: it is 1 MG with probability .2 2 MG ” ” .3 3 MG ” ” .4 4 MG ” ” .1 I need to set up a Markov Chain to model this problem, but I can't think of a way to define the states. Any ideas?