1. TRANSACTION PROCESSING SYSTEM
An Overview of the Transactional Processing System
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2. Transaction Processing System (TPS)
• A transaction processing system (TPS) provides data for other
business processes
– Management information system/decision support system
(MIS/DSS)
– Special-purpose information systems
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3. Figure 9.1: TPS, MIS/DSS, and Special Information
Systems in Perspective
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4. Transaction Processing System (Continued)
• TPSs
– Process the detailed data necessary to update records about
the fundamental business operations
– Include order entry, inventory control, payroll, accounts
payable, accounts receivable, the general ledger, and more
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5. Traditional Transaction Processing
Methods and Objectives
• Batch processing system: method of computerized processing in
which business transactions are accumulated over a period of time
and prepared for processing as a single unit or batch
• Online transaction processing (OLTP): computerized
processing in which each transaction is processed immediately,
without the delay of accumulating transactions into a batch
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6. Traditional Transaction Processing
Methods and Objectives Performance Reviews
(Continued)
• Online entry with delayed processing: transactions are entered
into the computer system when they occur, but they are not
processed immediately
• Organizations expect their TPSs to:
– Process data generated for and about transactions
– Maintain a high degree of accuracy and integrity
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– Produce timely documents and reports

7. Traditional Transaction Processing
Methods and Objectives Performance Reviews
(Continued)
• Organizations expect their TPSs to (continued):
– Increase labor efficiency
– Help provide increased service
– Help build and maintain customer loyalty
– Achieve competitive advantage
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8. Figure 9.2: Batch Versus Online Transaction
Processing
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9. Transaction Processing Activities
• TPSs
– Capture and process data that describes fundamental business
transactions
– Update databases
– Produce a variety of reports
• Transaction processing cycle: the process of data collection,
data editing, data correction, data manipulation, data storage, and
document production
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10. Figure 9.5: Data Processing Activities Common to
TPSs
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11. Figure 9.4: A Simplified Overview of a Transaction
Processing System
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12. Transaction Processing Activities (Continued)
• Data collection
– The process of capturing and gathering all data necessary to
complete transactions
• Data editing
– The process of checking data for validity and completeness.
• Data correction
– The process of reentering miskeyed or misscanned data that
was found during data editing.
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13. Transaction Processing Activities (Continued)
• Data manipulation
– The process of performing calculations and other data
transformation related to business transaction.
• Data storage
– The process of updating one or more databases with new
transactions.
• Document Production
– The process of generating output records and reports.
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14. Table 9.2: The Systems That Support Order
Processing, Purchasing, and Accounting Functions
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15. Order Processing Systems
• Order entry system: captures the basic data needed to process a
customer order
• Sales configuration system: ensures that the products and
services ordered are sufficient to accomplish the customer’s
objectives and will work well together
• Shipment planning system: determines which open orders will
be filled and from which location they will
be shipped
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16. Figure 9.7: Order Processing Systems
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17. Figure 9.8: Data Flow Diagram of an Order Entry
System
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18. Order Processing Systems (Continued)
• Shipment execution system: coordinates the outflow of all
products from the organization, with the objective of delivering
quality products on time to customers
• Inventory-control system: updates the computerized inventory
records to reflect the exact quantity on hand of each stock-keeping
unit
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19. Order Processing Systems (Continued)
• An invoicing application looks up the full name and address of the
customer, determines whether the customer has an adequate
credit rating, automatically computes discounts, adds taxes and
other charges, and prepares invoices and envelopes
• Customer relationship management (CRM) system: helps a
company manage all aspects of customer encounters, including
marketing and advertising, sales, customer service after the sale,
and programs to retain loyal customers
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20. Figure 9.12: Customer Relationship Management
System
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21. Order Processing Systems (Continued)
• Routing system: determines the best way to get products from
one location to another
• Scheduling system: determines the best time to pick up or
deliver goods and services
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22. Figure 9.13: Purchasing Transaction Processing
System
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23. Purchasing Systems
• Inventory control
• Purchase order processing system: helps purchasing
departments complete their transactions quickly and efficiently
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24. Figure 9.16: Financial Systems
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25. Purchasing Systems (Continued)
• Receiving system: creates a record of expected receipts
• Accounts payable system: increases an organization’s control
over purchasing, improves cash flow, increases profitability, and
provides more effective management of current liabilities
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26. Accounting Systems
• Budget transaction processing system: automates many of the
tasks required to amass budget data, distribute it to users, and
consolidate the prepared budgets
• Accounts receivable system: manages the cash flow of the
company by keeping track of the money owed the company on
charges for goods sold and services performed
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27. Figure 9.17: An Accounts Receivable Statement
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28. Accounting Systems (Continued)
• Payroll system prepares:
– Payroll check and stub
– Payroll register
– W-2 statements
• Asset management transaction processing system: controls
investments in capital equipment and manages depreciation for
maximum tax benefits 28

29. Accounting Systems (Continued)
• General ledger system: designed to automate financial reporting
and data entry
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30. Control and Management Issues
• Business continuity planning: identification of the business
processes that must be restored first in the event of a disaster and
specification of what actions should be taken and who should take
them to restore operations
• Disaster recovery: actions that must be taken to restore
computer operations and services in event of disaster
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31. Transaction Processing System Audit
• Does the system meet the business need for which it was
implemented?
• What procedures and controls have been established?
• Are these procedures and controls being used properly?
• Are the information systems and procedures producing accurate
and honest reports?
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32. Figure 9.3: Integration of a Firm’s TPSs
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33. Transaction Processing System Audit
• Does the system meet the business need for which it was
implemented?
• What procedures and controls have been established?
• Are these procedures and controls being used properly?
• Are the information systems and procedures producing accurate
and honest reports?
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34. International Issues
• Issues that multinational corporations face in planning, building,
and operating their TPSs
– Different languages and cultures
– Disparities in information system infrastructure
– Varying laws and customs rules
– Multiple currencies
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35. “Life is full of uncertainty, just go and deal with it.”
JAYSON C. JUECO
BS Electrical Engineering
Reporter
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