Transaction processing system

dedicated to mba students

1. TRANSACTION PROCESSING SYSTEM

2. Definition A Transaction Processing system (TPS) is a type of information system that collects, stores, modifies and retrieves the data transactions of an enterprise.

3. Features Rapid response : fast performance with rapid results. Reliability : well designed backup and recovery with a low failure rate. Inflexibility ; treat every transaction equally. Controlled processing ; maintain specific requirement for the roles and responsibilities of different employees.

4. Acid test In order to qualify as a TPS , transactions made by the system must pass the ACID test. ATOMICITY ; A transaction’s change to the state are atomic, either all happen or none happen. These changes include database changes , message, and action on transactions. CONSISTENCY ; TPS systems exist within a set of rules . ISOLATION ; treats each transaction separately and keeps data from each transaction separate. DURABILITY ; the data should continue to exist.

5. Types of TPS There are two types of TPS Batch processing and Real time processing

6. 1. Batch Processing system Batch processing is where the information is collected as a batch and then processed later on. Eg ; paying by Cheque

7. Advantages control over time of processing Standardization Reduced setup and processing costs Disadvantages time delay in gathering data , storing and bulk processing Operation cost may increase Only identical data is processed in one batch Errors are corrected after the processing of data

8. 2) Real Time Processing Real time processing is where all details of the transaction are recorded and changed at the time as it occurs Eg ; ATM’s

9. Advantages Error correction can be immediate Data is processed as demand No time delay Disadvantages Standardization may not exist or may be more difficult Processing needs make control difficult System hardware and software is expensive Security is critical

10. Transaction Processing C ycle Transaction processing system , capture and process data describing business transactions, update organizational databases , and produce a variety of information products. It should understand this as a transaction processing cycle of several basic activities .

11. 1 Data entry The first step of the transaction processing cycle is the capture of business data. Transaction data must be entered into the system. For eg ; transaction data may be collected by point-of-sale terminals using optical scanning of bar codes and credit card readers at a retail store or other business. A number of input and output devices exist for entering data . The documents generated at the source or point where the transaction occurs are called source document and become input data for the system. For eg ; when a customer returns an items at a store , the sales receipts becomes the source document for the transaction ‘return items for refund / replacement’.

12. 2)Transaction processing Transaction processing system process data in two basic ways; 1) batch processing , where transaction data are accumulated over a period of time and processed periodically. 2) real-time processing , also called online processing where data are processed immediately after a transaction occurs.

13. 3) Database maintenance An organizations databases must be updated by its transaction processing systems so that they are always correct and up-to-date. Therefore , transaction processing systems serve to assist in maintaining the corporate databases of an organization to reflect changes resulting from day-to-day business transactions. For eg ; credit sales made to customer will cause customer a/c balance to be increased and the amount of inventory on hand to be decreased . Database maintenance ensures that these and other changes are reflected in the data records stored in the company’s databases.

14. 4) Document and report generation Transaction processing system produce a variety of documents and reports. Eg of Transaction documents include purchase orders, sales receipts, customer statement etc.. Transaction reports might take the form of a transaction listing such as a payroll register, or edit reports that describe errors detected during processing.

15. 5) Inquiry Processing Many transaction processing systems allow you to use the Internet, intranets, extranet, and web browser or database management query languages to make inquiries and receive responses concerning the results of transaction processing activity Typically , responses are displayed in a variety of pre specified formats or screens. For example, you might check on the status of a sales order , the balances in an account, or the amount of stock in inventory and receive immediate responSes at your PC.

16. Purpose of TPS To keep records about the state of the organization. To process transaction that affects the record. To produce output that reports on transaction that have occurred.