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Management Information Systems
Notes Types of Transactions
There are mainly two types of transaction and these are:
Internal transaction
External transaction
Internal Transactions: Those transactions, which are internal to the company and are related
with the internal working of any organization.
Example: Recruitment Policy, Promotion Policy, Production Policy, etc.
External Transactions: Those transactions, which are external to the organization and are related
with the external sources, are regarded as External Transaction. For example sales, purchase, etc.
When a department orders office supplies from the purchasing department, an internal transaction
occurs, when a customer places an order for a product, an external transaction occurs.
Characteristics of Transaction Processing Systems
Various characteristics of TPS are:
A TPS records internal and external transactions for a company. It is a repository of data
that is frequently accessed by other systems.
A TPS performs routine, repetitive tasks. It is mostly used by lower-level managers to
make operational decisions.
Transactions can be recorded in batch mode or online. In batch mode, the files are updated
periodically; in online mode, each transaction is recorded as it occurs.
There are six steps in processing a transaction. They are data entry, data validation, data
processing and revalidation, storage, output generation, and query support.
Features of TPS
Various features of TPS are:
A TPS supports different tasks by imposing a set of rules and guidelines that specify how
to record, process, and store a given transaction. There are many uses of transaction
processing systems in our everyday lives, such as when we make a purchase at retail store,
deposit or withdraw money at a bank, or register for classes at a university. Almost all
organizations, regardless of the industry in which they operate, have a manual or automated
TPS.
A TPS is the data lifeline for a company because it is the source of data for other information
systems, such as MIS and DSS (Decision Support Systems). Hence, if the TPS shuts down,
the consequences can be serious for the organization.
A TPS is also the main link between the organization and external entities, such as customers
suppliers, distributors, and regulatory agencies.
TPS exist for the various functional areas in an organization, such as finance, accounting,
manufacturing, production, human resources, marketing quality control, engineering,
and research and development. Until a few years ago, many companies viewed the TPS for
each business function as separate entity with little or no connection to other systems in
the company. Today, however, many companies are trying to build cross-functional TPS
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