TRANSACTION PROCESSING MODELS

Transactions may be processed individually or in batches. Similarly, the processing may
be done at local offices or at the head quarters of companies. The type of processing depends on
a set of factors like the volume of data, complexity of data processing operations, processing
time constraints, computational demands and the degree of decentralization of authority. Thus,
the processing modes are as follows:
(a) Batch Processing:
Under this method transactions are accumulated into batches which are processed
periodically. Most organizations handle a large number and variety of transactions every day
such as cash sales, credit sales, sales commission, customer credit, consignment sale, advertising,
etc, in marketing area. An efficient way to process these transactions is to collect all transactions
of the same type of a particular period of time and process them as one batch of transactions.
Thus, all sales transaction of a day of a particular product are processed once in a day or period.
All these transactions are entered into the system at one time. This enables data processing
personnel to better control the entire processing cycle for that type of transaction, and leads to
more efficient scheduling of computer time.
(b). On-line Processing:
The term on-line refers to the fact that the input/output files, data files and related
equipment are connected to the computer such that a transaction may be entered at once or
information may be retrieved immediately any time. Each transaction is entered into the system
as and when it arises. There is no waiting for a minimum number of transactions to enter
transaction data into the system.
(c) On-line, Real Time Processing:
If the transaction is processed singly and as it occurs without any loss of time between
the event and recording of the event, the processing is in on-line, real time mode. It means that
the files for the transaction type are kept on-line, that is electronically connected to the computer,
and the transaction is processed quickly, for example airline reservation.
The concept of real time means that data is entered relatively quickly as they arise and
updated information is available without loss of any time between data entry and information
retrieval. Real time processing usually requires dedicated terminals connected to the central
computer. An input transaction triggers an immediate processing of data with the response being
returned in seconds, for example, on-line stock trading.
(d) Distributed processing:
This arose out of the need to channel data processing power to where data actually arise
and where it can be processed more efficiently. That is, some processing power is distributed to
local or regional level officers by installing computers there rather than centralizing it at the head
quarters. The detailed information required for daily operations remains at the local level and the
summary information required at higher levels for planning and controlling overall operations is
forwarded to the central computer.
(e) Online Transaction Processing Systems
Airlines reservation system, online securities trading system, electronic banking, railway
reservation system, hotel room booking system etc, are examples of on-line transaction
processing system.