Transaction Processing,

Information and Organizations

 TPS, MIS, DSS, and AI/ES
Hierarchy:

Information AI/ES Less More Less More

DSS
Decision Input & Sophistication
Routine & complexity of
support output
MIS processing & analysis

Data TPS More Less More Less

Information and Organizations

 Transactions
Transactions
Basic business operations such as customer orders,
purchase orders, receipts, time cards, invoices, and
payroll checks in an organization
Transaction processing systems (TPS)
Perform routine operations and serve as a
foundation for other systems

Information and Organizations

 Batch vs. On-Line Transaction
Processing
Two types of TPS:
Batch processing
A system whereby business transactions are
accumulated over a period of time and prepared
for processing as a single unit or batch
On-line transaction processing (OLTP)
A system whereby each transaction is processed
immediately, without the delay of accumulating
transactions into a batch

Information and Organizations

 Batch Schematic

Data entry
Input
of accumulated Output
transactions (batched)

Information and Organizations

 On-line Schematic

Terminal
Terminal Terminal

Output

Terminal Immediate
processing
of each
transaction

Terminal
Terminal
Information and Organizations
 Objectives of TPS
Process data generated by and about transactions
Maintain a high degree of accuracy
Ensure data and information integrity and accuracy
Produce timely documents and reports
Increase labour efficiency
Help provide increased and enhanced service
Help build and maintain customer loyalty
Achieve competitive advantage

Information and Organizations

 TPS Activity Model
Data capture
From online entry or external system
Data validation
Should be done as close to source as possible
Processing
Data manipulation
Database updating
Generation of transactions for other systems
Archive Transaction
Create documents and reports
Information and Organizations
 Simplified Overview of a
Transaction Processing System

Schematic

Information and Organizations

Data entry & input

Documents
Processing
& reports

Documents:
Documents:
Internally
Internallygenerated
generated
transactions: pick
picklist
list
transactions:
Database
shipped cheques
chequestotovendors
shippedorders
orders vendors
purchase receiving
receivingnotices
purchaseorders
orders notices
Database
Databaseupdate:
update: paycheques
employee
employeetime
timecards
cards paycheques
customer
customerorders
orders
Externally
Externallygenerated
generated Operational
Operationalreports:
reports:
transactions:
transactions: inventory
inventory finished
finishedproduct
product
customer
customerorders
orders purchase
purchaseorders
orders inventory
inventorystatus
status
vendor customers raw
rawmaterials;
materials;packing
vendorinvoices
invoices customers packing
materials;
materials; spareparts;
spare parts;
customer
customerpayments
payments suppliers
suppliers inventory status
inventory status
Information and Organizations
 Data Processing Activities
Common to TPSs
A transaction processing cycle
Data collection
Data editing
Data correction
Data manipulation
Data storage
Document production

Schematic

Information and Organizations

 Original data

Data
collection

Data
edit

Data
Data manipulation
correction

Data
storage

Document
production

Information and Organizations

 Source Data Automation
Source data automation
The process of capturing data at its source with
minimal manual effort
Data are entered directly into the computer

Information and Organizations

 Point-of-Sale Transaction
Processing System
Customers
receipt Management Exception
Inventory information report
database system
UPC and
Point-of-sale quantity
UPC transaction
Scanner
Quantity, processing
Date, system Item, quantity,
time date, time, price

Purchases
UPC Price
database

Item
database

Information and Organizations

 Control and Management Issues
Business resumption planning
The process of anticipating and providing for disasters.
Disaster recovery
The implementation of the business resumption plan.
Transaction processing system audit
An examination of the TPS in an attempt to answer three basic
questions
Does the system meet the business need?
What procedures and controls have been established?
Are the procedures and controls being properly used?

Information and Organizations

 Traditional TPS
Order Processing
Order processing
Processing an order from entry to delivery,
including traditional accounting transactions

Schematic

Information and Organizations

Invoice
Customer
Products Customer order in person or via
mail, phone, EDI, internet

Inventory status Order entry/

sales configuration

Orders
Planned
Finished Shipment shipments
product Routing
planning
inventory
Pick list Planned
shipments
Shipment & routes
execution

Shipped orders Scheduling

Invoicing

Information and Organizations

 Order Processing Support Systems -
Sales Configuration
Sales configuration
Ensures that products and services ordered are
sufficient to accomplish customers objectives and
will work well together

Information and Organizations

 Order Processing Support Systems -
Shipment Planning
Shipment planning
A system that determines which open orders will be
filled and from which location they will be shipped
E.g., (from Figure 8.9)

LOC LINK ITEM NUMBER DESCRIPTION ORDERED SHIPPED BO

8 105 10 L1L16028 FASENTING TOOL 3 EACH 3

20 S8276 STAPLE INCH 15 CASE 15
30 S8279 STAPLE 1 INCH 15 CASE 12 3
40 SHIPPING CHARGE

Information and Organizations

 Order Processing Support Systems -
Shipment Execution
Shipment execution
A system that coordinates the outflow of all
products and goods from the organization, with the
objective of delivering quality products on time to
customers

Information and Organizations

 Order Processing Support Systems -
Inventory Control
Inventory control
A system that updates the computerized inventory
records to reflect the exact quantity on hand of each
stock keeping unit
Status reports
Summarize all inventory items in stock, or shipped over a
specified period of time
E.g., see Figure 8.10

Information and Organizations

 Order Processing Support Systems -
Invoicing
Invoicing
Generates customer invoices based on records
received from the shipment execution TPS
E.g., see Figure 8.11

Information and Organizations

 Order Processing Support Systems -
Customer Interaction System
Customer interaction
A system that monitors and tracks each customer
interaction with the company

Information and Organizations

 Customer

Request Problem, idea,

Other
for Sale request for
contacts
proposal information

Customer
interaction
system

Market Product
research development

Sales Quality
control
Marketing
Information and Organizations
 Order Processing Support Systems -
Routing and Scheduling
Routing
A system that determines the best way to get goods
and products from one location to another
Scheduling
A system that determines the best time to deliver
goods and services

Information and Organizations

Purchasing System

Schematic

Information and Organizations

 Raw materials
Packing materials
Spare parts
Inventory control
Inventory control
Purchase status report
order
request Purchase order
Employees
processing
Purchase
order
Purchase
order

Material
Receiving Supplier

Receiving Invoice
notice

Accounts Cheque
payable

Information and Organizations

 Purchasing System
Inventory control
Maintains stock of items such as raw materials, packing materials, spare
parts, and supplies
Purchase order (P.O.) processing
A system that helps purchasing department complete transactions
quickly and efficiently
Receiving
A system that creates a record of expected and actual receipts
Reconciles purchase orders with what is actually received
Accounts payable
A system that increases an organizations control over purchasing,
improves cash flow
increases profitability, and provides more effective management of
current liabilities

Information and Organizations

 Accounting System
Accounting systems
Consist of
Budget
Accounts receivable
Accounts payable
Payroll
Asset management
General ledger

Information and Organizations

Financial Systems

Schematic

Information and Organizations

 Asset
Customer
management

Cost of assets
Payments
Accounts Accounts
receivable payable

Amounts owed by customers Amounts owed by company

Amounts paid by customers Amounts paid by company

Labour costs General

Payroll
ledger Asset depreciation

Paycheques Expense
Time transactions
cards

Customer Budget

Information and Organizations

 Financial Systems -
Accounts Receivable
Accounts receivable
A system that manages the cash flow of the
company by keeping track of the money owed the
company on charges for goods sold and services
performed

Information and Organizations

Information and Organizations
 Financial Systems
Accounts Receivable
Accounts receivable aging report
Tells managers what bills are overdue, either
customer by customer or in a summary format

Information and Organizations

Information and Organizations
 Financial Systems - Payroll

Payroll
Generates payroll checks and stubs, as well as W-2
statements at the end of the year for tax purposes

Information and Organizations

 Financial Systems - Payroll

Payroll journal
Helps managers monitor total payroll costs for an
organization and the impact of those costs on cash
flow

Information and Organizations

 Financial Systems -
Asset Management
Asset management transaction processing
system
A system that controls investments in capital
equipment and manages depreciation for maximum
tax benefits

Information and Organizations

Financial Systems - General Ledger

Information and Organizations