The mail order firm described in Problem and Exercise 13 has about 1 million customers....

The mail order firm described in Problem and Exercise 13 has about 1 million customers. The firm is planning a mass mailing of its spring sales catalog to all of its customers. The unit cost of the mailing (postage and catalog) is $6.00. The error rate in the database (duplicate records, erroneous addresses, etc.) is estimated to be 12 percent. Calculate the expected loss of this mailing due to poor-quality data.

Reference Problem and Exercise 13

An e-business operates a high-volume catalog sales center. Through the use of clustered servers and mirrored disk drives, the data center has been able to achieve data availability of 99.9 percent. Although this exceeds industry norms, the organization still receives periodic customer complaints that the Web site is unavailable (due to data outages). A vendor has proposed several software upgrades as well as expanded disk capacity to improve data availability. The cost of these proposed improvements would be about $25,000 per month. The vendor estimates that the improvements should improve availability to 99.99 percent.

a. If this company is typical for a catalog sales center, what is the current annual cost of system unavailability? (You will need to refer to Tables 11-2 and 11-3 to answer this question.)

b. If the vendor’s estimates are accurate, can the organization justify the additional expenditure?