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Chapter 10

Business Operations


Our Agenda Increasing Business Operations

Efficiency Transaction Processing Systems Basic Business Information

Systems Other Business Information

Systems Enterprise Resource Planning

Systems


Learning Objectives Give an example of a computer

information system that increases the efficiency of business operations.

Explain the purpose and structure of transaction processing systems.

Describe the functions of transaction processing systems.


Learning Objectives (cont’d.) Describe several ways of

controlling transaction processing systems.

Explain the difference between batch processing and on-line transaction processing.

Summarize the characteristics of basic business information systems.


Learning Objectives (cont’d) List several examples of

accounting, financial, marketing, manufacturing, and human resource information systems.

Explain what an enterprise resource planning system is.


Increasing Business Operations Efficiency

Business Operations


Increasing Business Operations Efficiency Efficiency has to do with how much

a system produces relative to the resources, such as people and money, used by the system.

To be competitive today, most businesses require some form of computer information system for their basic operations.


Transaction Processing Systems

Business 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:

1. Keep records about the state of the organization.

2. Process transactions that affect these records.

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 Transaction processing systems

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 main data used by the system.

2. Transaction data – is data about the transactions that have occurred.


Processing Function Processing involves manipulating

data within the system. Two operations in the processing

function: Computation – doing calculations with

data. Decision making – 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.

Three types of reports1. Detail report – lists detailed

information2. Summary report – contains

summarized information3. Exception report – lists exceptions to

norm


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 Audit Trails Backup and Recovery Procedures Processing Data in Transaction

Processing Systems


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.

Sometimes several control totals are calculated and checked in the system to be sure all data has been processed accurately.


Audit Trails An audit trail is a way of tracing

the effect 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 – transactions to be processed are prepared in a form understandable by the computer before actual processing begins.

2. On-Line Transaction Processing (OLTP) – permits a person to use a keyboard and screen at the time the processing is done.


Basic Business Information Systems

Business Operations


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 and 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, and 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.

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, and 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 and 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 and to prepare financial statements.

To produce the financial statements, the general ledger system uses stored general ledger data.


Other Business Information Systems

Business Operations


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 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


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) Supply-chain management


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 Systems

Business Operations


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.

ERP systems are designed for applications that encompass a large portion of a business.


Business Operations

Key Terms


Key Terms Accessing Accounting Information System Accounts Payable System Accounts Receivable System Audit Trail Backup Procedure

Batch Processing Billing System Control Control Total Data Validation Detail Report Enterprise Resource Planning (ERP) Exception Report


Key Terms (cont’d.) Financial Information System General Ledger System Human Resource Information System (HRIS) Interactive Processing Inventory Control System

Manufacturing Information System


Summary Increasing Business Operations

Efficiency Transaction Processing Systems Basic Business Information

Systems Other Business Information

Systems Enterprise Resource Planning

Systems

Final Black Slide

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Documents

transaction data

processing function

online transaction processing

batch processing

desiamore1 slide

main data

output function slide

master data