Chapter 8

1.What is a Transactional Processing and the role of TP systems. State the key objective of TP/TPSs.

Transaction processing systems monitor, collect, store and process data generated from all business transactions. The role of a TP system is conduct the efficient operations of the day to day business i.e. sales, receipts, cash deposits, payroll, credit decisions and flow of materials. Some key objectives of a TP/TPSs system:

• Process large volume of data – eg. sales
• Data sources are mostly internal, and the output is intended mainly for internal audiences (eg. managers)
• TPS operate regularly (on demand, daily, weekly, etc.
• They require large storage (database) capacity
• They require high processing speed due to the high volumes
• Input and output data are known and well‐understood (highly structured)
• They involve a high level of detail, but low computation complexity
• They require a high level of accuracy, data integrity, and security
• They require high processing reliability; organizations cannot function for long without TPS’s –> hence the need for backups, UPS
• They support inquiry processing – queries/reports

Image below shows key functions:

2. What is a functional area information system? List its major characteristics.

Functional area information Systems are designed to support a functional area by increasing its internal effectiveness and efficiency in the following areas:

• Accounting
• Finance
• Marketing
• Operations (POM)
• Human Resources Management

Key characteristics is to provide information to lower/middle mangers in the functional areas.

Image below shows functional area information systems supporting functional areas:

3. How does an FAIS support management by exception? How does it support on-demand reports?

FAIS support managers to the extent to only functional areas of the business .FAIS provide management both lower and middle information for the day to day running of operations. These systems are used for effective mangement and effeicient operaions. Functional area information systems can aid management by the development of a wide variety of reports for use by managers. These include:

• Routine reports related to hourly/daily events
• Ad hoc (on demand) reports
• Drill‐down reports – more detailed
• Key‐indicator reports – performance of critical activities
• Comparative reports – different sales teams
• Exception reports – used to identify exceptions to requirements, eg. poor sales performance

4. Define ERP and describe functionalities.

Enterprise Resource Planning (ERP) is a system that collectively brings all data and processes of an organisation system together. Simply it allows for a single database for operation for a number of functions of an orgnisation e.g. maufacturing, supply chain and customer relationship mangment (CRM). The central objective of the system is to collobrate the functional raes of the orgnasiation and enable effecinet information across all fucntional areas.

5. List some drawbacks of ERP software.

ERP has many benefits of an orgnaistaion though the major precieved darwback for a firm is the relative expense. The cost to introduce teh software is very expesnive for a firm and is a major reason for not implementing the system. A firm may want to analysis cost v benefits of the introduction of the system and see if it is viable asset to have.

6. Define a supply chain and supply chain management (SCM).

Supply chain is a network of organizations and facilities that transforms raw materials into products delivered to customers. It allows for the efficent flow of materials, money and information through the organisation e.g. from production to customer.

Image below show's this:

7. List the major components of supply chains.

The three major component of supply chain are upstream, internal and downstream.

Upstream - involves sourcing or procurement from external suppliers occurs.

Internal - is packaging, assembly or manufacturing takes place.

Downstream -invovles the distribution, freqently by external distributors.

8. What is the bullwhip effect?

The bullwhip effect is a natural dynamic that occurs because of the multistage nature of the supply chain. It is not related to erratic consumer demand. Simiply it is erradict shifts in the supply and demand curve.

9. Define EDI and list its major benefits and limitations

Electronic data interchange (EDI) is a communication standard that enables business partners to exchange routine documents, such as purchase orders electronically. This process allows for small packets of data to be sent from one organsiation to another in a more efficent and effective manner. This process also has increased the process known as dissemenatation - the removal of wholesalers and retailers from the supply chain.

Major benefits incluude:

• Minimize data entry errors
• Length of messages are shorter
• Messages are secured
• Reduces cycle time
• Increases productivity
• Enhances customer service
• Minimizes paper usage and storage

Major limitations include:

• Significant initial investment to implement
• Ongoing operating costs are high due to the use of expensive, private VANs (??)
• Traditional EDI system is inflexible
• Long startup period
• Multiple EDI standards exist

Image below shows a customer to entity relationship of an EDI: