Question

• Company ABC operates an online marketplace similar to Amazon where third-party retailers sell merchandise to consumers. ABC collects a 1% fee of every transaction made on its website and operates 24 hours, 7 days a week.
• If an average of 30 million transactions are performed every month on ABC’s platform and retailers sell $100 per transaction on average, estimate the downtime cost (of lost fees for ABC) if the platform becomes unavailable for:

                    (a) 1 hour         (b) 12 hours                   (c) 3 days

• There is a chance that 20% of the largest 500 retailers will sue ABC in any case the platform becomes unavailable. If the retailer wins the lawsuit, ABC will pay a $1 million fine per lawsuit. If the probability that a retailer wins a lawsuit is 70%, how much ABC should expect to pay in fines every time the system becomes unavailable?
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Answer 1

= C. WDV 18 feb - Microsoft Excel Home Insert Page Layout Formulas Data Review View * Cut Calibri - 11 - A A = = = D Wrap Text General La Copy Paste BI U DA Conditional Format Merge & Center Format Painter Cell Insert Delete Format Formatting as Table Styles Clipboard Font Alignment Number Styles Cells G9 - Fax в C D E F H Total no. of transaction during a month 30,000,000 Calculation of operating time in a month Rate per transaction average $ 100 Hours in a day 24 hours 3 Fees collected by ABC in each transactions @1% $1 Days in a week 4 No. of week in a month 5 A Calculation of downtime cost of lost fees for ABC) if the platform becomes unavailable for following cases: Total no. of operating hour in month 672 1 hour 12 hours 3 days Total no. of transaction in a hour 44,643 7 Total no. of transaction in 44,643 535,714 3,214,286 Total no. of transaction in a day 1,071,429 (30,000,000/672) (30,000,000/672)*12 (30,000,000/(7*4)*3) 9 Total lost of fees for each case $ 44,643 $535,714 $3,214,286 2 4 10 13 11 B Total amont ABC should pay as fine for each case of failure of unavilability of system 12 Chances of sue against ABC by 500 retailer 20% Total no. of retailer 500 Winning percentage by retailer 70% 15 total Winning of lawsuit by 500 retailer Amount of fine per lawsuit $ 1,000,000 17 Total amount of fine by ABC for each case $ 70,000,000 14 16