Transaction processing is a basic activity in organizations. It is a routine and repetitive
activity that triggers a few other activities like updating database and generation of documents
forming a cycle. The transaction processing cycle consists of six steps such as:
a. Data entry
b. Input data validation
c. Transaction processing and validation of results
d. File and database maintenance
e. Document and report generation, and
f. Inquiry processing
The transactions are measured in some convenient unit for recording such as money unit
for expenses, hours in case of labour etc. Data pertaining to the transaction must be entered into
the system. The source of this data usually is a document such as sales order from customers,
invoice from suppliers etc., these are called source documents and they provide the basic data for
TPS. The data is entered using either the traditional data entry methods or the direct data entry
methods. In the former method the source documents like purchase order are prepared and
usually accumulated into batches. The direct entry method uses automated systems for data
capturing and recording. Point of sale terminals, optical scanners and MICR devices are used in
capturing data and transferring data to computers in real time for transactions processing.
Input data validation is the next step in TPS. It checks the accuracy and reliability of data
by comparing it with range data or standards etc. It involves error detection and error correction.
Checking for errors include checking the data for appropriate format, missing data and
inconsistent data. If the data value falls outside the normal range it is invalid. For example, if a
firm’s orders for materials in kilograms ranging from 100 to 1000 kilograms and if that range is
accepted as normal data range for purchase orders, then this range is coded into the program for
validation checking. That whenever a purchase order is prepared, as soon as quantity is entered
in the appropriate column the system check whether the quantity entered is between 100 and
1000. Otherwise it will give an error message as “Check the Quantity Entered, it is out of
range” or some other error message as is coded.
Processing of transaction data is the next step. This involves some computation,
checking and comparing etc. For instance, if it is a credit sale transaction, then the total value of
the transaction has to be computed, the system should check whether the value is within the
credit limit sanctioned to the customer, it should check the availability of stock, delivery data
possible etc.
Once the transaction is processed, certain output needs to be generated. The output may
be some documents like sales invoices, pay slips etc. Or screen displays or the output data may
used to update related databases. Files and databases have to be updated with each transaction or
each batch of transactions. In case of applications that are not time critical, the transactions may
be processed in batch mode. Certain systems like airline reservation require updating with every
transaction for giving status information in real time. Direct data entry devices have to be used
to capture transaction data and update related files and databases to provide current information
to users.
Inquiry processing is another activity of transaction processing system which involves
providing information on current status like inventory levels, customer credit limit, dues from a
particular customer, inbound supply, et. The inquiry response is pre-planned and the on-screen
display or output is formatted for the convenience of the requester.
A business transaction with a customer involves a good or service that a customer want
and the business provides for a price. The TPS supports the delivery process.
To complete a transaction with an external entity like customer, supplier etc. a series of
activities is involved such as checking of account, current inventory balance, delivery time and
price.
For instance, the transaction at a bank counter involves checking of account balance,
withdrawal of money or deposit of money. In the case of some transactions, an activity serves as
a trigger and a series of activities follow it. For example, a sales order from a customer is
followed by a number of activities; some of these are queries like:
each of these points in the sales order processing, the information about the state of the order is
recorded.
activity that triggers a few other activities like updating database and generation of documents
forming a cycle. The transaction processing cycle consists of six steps such as:
a. Data entry
b. Input data validation
c. Transaction processing and validation of results
d. File and database maintenance
e. Document and report generation, and
f. Inquiry processing
The transactions are measured in some convenient unit for recording such as money unit
for expenses, hours in case of labour etc. Data pertaining to the transaction must be entered into
the system. The source of this data usually is a document such as sales order from customers,
invoice from suppliers etc., these are called source documents and they provide the basic data for
TPS. The data is entered using either the traditional data entry methods or the direct data entry
methods. In the former method the source documents like purchase order are prepared and
usually accumulated into batches. The direct entry method uses automated systems for data
capturing and recording. Point of sale terminals, optical scanners and MICR devices are used in
capturing data and transferring data to computers in real time for transactions processing.
Input data validation is the next step in TPS. It checks the accuracy and reliability of data
by comparing it with range data or standards etc. It involves error detection and error correction.
Checking for errors include checking the data for appropriate format, missing data and
inconsistent data. If the data value falls outside the normal range it is invalid. For example, if a
firm’s orders for materials in kilograms ranging from 100 to 1000 kilograms and if that range is
accepted as normal data range for purchase orders, then this range is coded into the program for
validation checking. That whenever a purchase order is prepared, as soon as quantity is entered
in the appropriate column the system check whether the quantity entered is between 100 and
1000. Otherwise it will give an error message as “Check the Quantity Entered, it is out of
range” or some other error message as is coded.
Processing of transaction data is the next step. This involves some computation,
checking and comparing etc. For instance, if it is a credit sale transaction, then the total value of
the transaction has to be computed, the system should check whether the value is within the
credit limit sanctioned to the customer, it should check the availability of stock, delivery data
possible etc.
be some documents like sales invoices, pay slips etc. Or screen displays or the output data may
used to update related databases. Files and databases have to be updated with each transaction or
each batch of transactions. In case of applications that are not time critical, the transactions may
be processed in batch mode. Certain systems like airline reservation require updating with every
transaction for giving status information in real time. Direct data entry devices have to be used
to capture transaction data and update related files and databases to provide current information
to users.
Inquiry processing is another activity of transaction processing system which involves
providing information on current status like inventory levels, customer credit limit, dues from a
particular customer, inbound supply, et. The inquiry response is pre-planned and the on-screen
display or output is formatted for the convenience of the requester.
A business transaction with a customer involves a good or service that a customer want
and the business provides for a price. The TPS supports the delivery process.
To complete a transaction with an external entity like customer, supplier etc. a series of
activities is involved such as checking of account, current inventory balance, delivery time and
price.
For instance, the transaction at a bank counter involves checking of account balance,
withdrawal of money or deposit of money. In the case of some transactions, an activity serves as
a trigger and a series of activities follow it. For example, a sales order from a customer is
followed by a number of activities; some of these are queries like:
- Checking whether the customer is an existing or a new customer,
- Checking customer’s credit limit to know whether the transaction is within the permitted credit limit or not,
- Checking inventory balance to know whether the order can be fulfilled within the time the customer needs it,
- Checking production schedule to know how much will be added to finished stock at the end of a production period,
- Checking of back orders to know how much stock will be left to meet this sale order.
- Once this querying is over and if adequate stock is available for meeting the order, the sales order is approved and the transaction is processed. This involves
- Debiting customer account with the value of goods
- Crediting sales file with the value of goods
- Updating inventory file with the quantity of stock sold
- Generating a packing list for the Dispatch department to assemble the order
- Generating documents like sales invoice bill of exchange etc.
- Packing the goods and handing them to the delivery staff, and
- Delivering the goods.
each of these points in the sales order processing, the information about the state of the order is
recorded.
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