Modern Database Management: Chapter 11 Problem and Exercise 16

the-average-annual-revenue-per-customer-for-the-mailorder-firm-described-in-problems-and-exercises-13-and-15-is-100-the-organization-is-planning-a-data-quality-improvement-program-that-it-hopes-will-increase-the-average-revenue-per-customer-by-5-percent-per-year-if-this-estimate-proves-accurate-what-will-be-the-annual-increase-in-revenue-due-to-improved-quality

Question

The average annual revenue per customer for the mail-order firm described in Problems and Exercises 13 and 15 is $100. The organization is planning a data quality improvement program that it hopes will increase the average revenue per customer by 5 percent per year. If this estimate proves accurate, what will be the annual increase in revenue due to improved quality?

Answer

The average annual revenue per customer for the mail-order firm described in PE 13 and PE 15 is 100$.

The increase in annual revenue per customer due to data quality improvement is 15% per year = 0.05.

From Problem definition of 15PE, it is known that the number of customers is 1 million, 1,000,000.

Now, annual increase in revenue due to improved quality is given by:

= annual revenue per customer  x  increase in annual revenue  number of customers
= 100 x 0.05 x 1000000
= 5000000

So, the average increase in annual revenue will be $5million.


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