The mail order firm described in Problem and Exercise 12-33 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, and so forth) is estimated to be 12 percent. Calculate the expected loss of this mailing due to poor-quality data.

Problem and Exercise 12-33

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 99.5 percent. Although this exceeds industry norms, the organization still receives periodic customer complaints that the Web site is unavailable. 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 $50,000 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?

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