One of the few surviving on-line grocers,

One of the few surviving on-line grocers, Fresh Direct uses 150 trucks to generate delivery within 2 hours. Currently Fresh Direct sells $200 million worth of food per year representing 2 million orders and comprising 60 million items. A major part of the operation depends on how well workers in the warehouse assemble orders. An error caught before a shipment leaves the warehouse costs $0.50 per item, while every error found after shipping costs $6.00 per item. After years of effort, Fresh Direct achieved a level of accuracy in assembly so that 99.6% of its items were correctly filled and shipped (that is, only 0.4% items were not shipped correctly). Recently a software firm offered Fresh Direct a RFID product that would check the items in an order after it was assembled and before it left the warehouse and would catch 75% of the incorrect items, thus improving overall order accuracy to 99.9%. What is the maximum that Fresh Direct should be willing to pay to purchase the new system if it wants to recoup the new system costs within a year?

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