1 California State University, Fullerton Chapter 10 Business Operations

1California State University, Fullerton

Chapter 10

Business Operations


Increasing Business Operations Efficiency To be competitive today, most

businesses require some form of computer information system for their basic operations.


Transaction Processing Systems The main type of information

system used for operational support in a business is the transaction processing system (TPS).


Transaction Processing System Structure

Three elements of a Transaction Processing System (TPS):

1. Process transactions that affect these records.

2. Keep records about the state of the organization.

3. Produce outputs that report on transactions that have occurred, that report on the state of the organization, and that cause other transactions to occur.


Transaction Processing System Functions TPS consist of four main functions

to accomplish their purposes. They are:

1. Input function2. Storage function3. Processing function4. Output function


Input Function Before transaction data can be

brought into a transaction processing system, it must be acquired from its source – a step called data capture.

Data is often captured from a source document.

Data once captured, it is put into the system – a step called data entry.


Input Function (cont’d.) As data is entered into the system,

a program must check it for errors, a step called data validation.


Storage Function Data in a transaction processing system

is stored in data files and databases. Two types of data commonly found in

transaction processing systems:1. Master data – is the data that is maintained

by the system.2. Transaction data – is data about the

transactions that have occurred. Transaction data is used to update master data.


Processing Function Processing involves manipulating data

within the system. Two operations in the processing

function: Computation – doing calculations with

data. Decision making (logical operations) –

checking a condition that causes processing to continue in different ways depending on the result of the decision.


Output Function Output from a transaction processing

system can be displayed on a screen or printed on paper.

Two types of reports1. Periodical report – is produced periodically

1. Detail report – lists detailed information2. Summary report – contains summarized

information

2. Exception report – is produced when an exception to nom occurs


Controlling Transaction Processing Systems Procedures to ensure the

completeness of the data processing and to minimize the chance of error are called controls. They include: Control Totals

Batch Totals Hash Totals

Audit Trails Backup and Recovery Procedures


Control Totals A control total is a number that is

computed when data enters a system and then computed again after the system has processed the data.


Audit Trails An audit trail is a way of tracing

the origin of data through a system.

A good audit trail is one in which someone can start with the output and go back through the system to the source document, or vice versa.


Backup and Recovery Procedures Backing up means that the data is

copied periodically to another storage media.

Recovery means that the backup copy of the data can be used to re-create the original data stored on the system.

Without adequate backup and recovery procedures, there is a great risk of losing data permanently.


Processing Data in Transaction Processing Systems Two basic approaches to processing

data in a transaction processing system:

1. Batch Processing (BP) – transactions to be processed are prepared in a form understandable by the computer before actual processing begins.

2. On-Line Transaction Processing (OLTP) – transactions are processed and the related master files are update immediately as the transaction data is entered.


Basic Business Information Systems Eight basic information processing

activities:1. Entering customer orders2. Billing customers3. Collecting customer payments4. Keeping track of inventory5. Purchasing stock and materials6. Paying bills7. Paying employees8. Reporting financial information


Entering Customer Orders An order entry system permits

entry of customer orders for goods and services and prepares the orders in a form that can be used by the business.


Entering Customer Orders (cont’d.) Once orders are entered, the

following questions must be answered: Does the business have sufficient

inventory to fill the order? Should the business extend credit to

this customer or require that the customer pay in advance?


Billing Customers The purpose of a billing system is

to prepare the customer’s bill or invoice.

To prepare the invoice from the sales order data, two types of master data are required:

1. Customer master data2. Inventory master data


Collecting Customer Payments The accounts receivable system is

used: To keep track of money owed To the business by its customers To record customer payments for invoices.

To produce the outputs, two types of stored data are used:

1. Accounts receivable data2. Customer master data


Keeping Track of Inventory The inventory control system is used:

To keep track of the business’s inventory To indicate when inventory should be

reordered To compute the value of the inventory.

The stored data needed in this system is the inventory master data.


Purchasing Stock and Materials The purchasing system is used:

To determine the best suppliers (also called vendors) from which to purchase items.

To Prepare documents, called purchase orders, which indicate to the supplier what items are wanted.


Purchasing Stock and Materials (cont’d.) To prepare the purchase order,

two types of information are required:

1. Inventory master data2. Supplier master data


Paying Bills The accounts payable system is

used: To keep track of money owed by the

business for purchases To pay suppliers for items purchased To provide reports of accounts

payable to other functions of the business.


Paying Bills (cont’d.)

To produce the outputs, two types of stored data are used:

1. Accounts payable data2. Supplier master data


Paying Employees The payroll system is used:

To prepare paychecks for employees To provide reports of payroll

To produce the outputs two types of data are required:

1. Employee work data2. Employee master data


Reporting Financial Information The general ledger system is used:

To maintain the business’s financial accounts

To prepare financial statements To produce the financial

statements, the general ledger system uses: General ledger data


Accounting Information Systems Accounting Information Systems

(AIS) support the accounting function. Several commonly used AIS systems are: Fixed asset accounting Budgeting Tax accounting


Financial Information Systems Financial information systems

provide necessary support for the finance function. Some common financial information systems include: Cash management Capital expenditure analysis Financial forecasting Portfolio (investment) management Credit analysis


Marketing Information Systems Marketing information systems assist in

the marketing function. Common marketing information systems include: Sales analysis Sales forecasting Marketing research Direct mail advertising Electronic commerce Sales force automation or Customer

Relationship Management (CRM).


Manufacturing Information Systems Manufacturing information systems

provide services to support the manufacturing function. Some common manufacturing information systems include: Production scheduling Materials Requirements Planning (MRP) Manufacturing Resource Planning

(MRPII)


Manufacturing Information Systems (cont’d.)

Just-In-Time (JIT) Computer-Aided Design (CAD) Computer-Aided Manufacturing (CAM) Robotics Computer-Integrated Manufacturing

(CIM)


Human Resource Information Systems Human Resource Information

Systems (HRIS) support the human resource function. Common HRIS include: Performance appraisal Skills inventory Benefits administration Job applicant tracking


Enterprise Resource Planning

An information system that supports several areas of a business by combining a number of applications with a single database that stores all the data used by the applications.

Documents

1 California State University, Fullerton Chapter 10 Business Operations