Management information system ralp 7e ch09

• An organization’s TPS must support the routine, day-today activities that occur in the normal course of business
and help a company add value to its products and services

• Identify the basic activities and business objectives
common to all transaction processing systems
• Explain some key control and management issues
associated with transaction processing systems
• Describe the inputs, processing, and outputs for the
transaction processing systems associated with order
processing, purchasing, and accounting business processes
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• TPSs help multinational corporations form business links
with their business partners, customers, and subsidiaries

• Identify the challenges that multinational corporations must
face in planning, building, and operating their TPSs

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• Implementation of an enterprise resource planning system
enables a company to achieve numerous business benefits
through the creation of a highly integrated set of systems

• Discuss the advantages and disadvantages associated with
the implementation of an enterprise resource planning
system

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An Overview of Transaction Processing
Systems
• 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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Figure 9.1: TPS, MIS/DSS, and Special
Information Systems in Perspective

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An Overview of Transaction Processing
Systems (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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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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Figure 9.2: Batch Versus Online

Transaction Processing

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Traditional Transaction Processing
Methods and Objectives (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
• Produce timely documents and reports
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Traditional Transaction Processing
Methods and Objectives (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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Figure 9.3: Integration of a Firm’s TPSs

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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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Figure 9.4: A Simplified Overview of a
Transaction Processing System

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Figure 9.5: Data Processing Activities
Common to TPSs

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Transaction Processing Activities
(continued)
• Data collection
• Should be collected at source
• Should be recorded accurately, in a timely fashion

• Data editing
• Data correction

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Transaction Processing Activities
(continued)
• Data manipulation

• Data storage
• Document production and reports

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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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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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Table 9.2: The Systems That Support
Order Processing, Purchasing, and
Accounting Functions

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Order Processing Systems
• Order entry
• Sales configuration
• Shipment planning
• Shipment execution

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Order Processing Systems (continued)
• Inventory control
• Invoicing
• Customer relationship management
• Routing and scheduling

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Figure 9.7: Order Processing Systems

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Order Processing Systems (continued)
• 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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Figure 9.8: Data Flow Diagram of an Order
Entry System

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