Mariano Marcos State University

COLLEGE OF BUSINESS, ECONOMICS AND ACCOUNTANCY

City of Batac, 2906

In partial fulfillment of the requirement in

BA 41

Submitted by:

Xilca Joyce Sales

Nemalyn Santiago
Jessa Mae Bagain
Remelyn Barayuga
Vhiah Manurac
Darlene Mae Ragosante

Submitted to:

Ms. Carmela G. Adriatico

Instructor

August 18, 2016

PART II. INFORMATION SYSTEMS IN BUSINESS

Reporter 1: Xilca Joyce Sales

A. Definition of Computer-Based Information System

A computer-based information system or CBIS, uses computers to collect,

process, store, analyze and distribute information for a specific purpose, such as meeting
a business objective. The main components of a CBIS include hardware, software, data,
procedures and people.

In a CBIS, the hardware is the physical machinery, such as a computer, printer,

display screen and cables. The hardware devices work together to accept data, or raw
facts, as input before processing the data into useful information and then displaying the
information as output. Software refers to computer programs that provide instructions for
processing the data. The procedures are what people perform when working with a CBIS
to process data and produce information.

B. Transaction Processing System (TPS)

Definition and Types of Transaction

Transaction is defined as a business event whose relevant attributes need to be

recorded internally (in the corporate database) as well as externally (for a customer, a
supplier, a business partner, etc.) due to the impact this information will later have on
other operations of the organization and its stakeholders.

TYPES OF TRANSACTIONS

1. Internal transactions

 Those transactions which are internal to the company and are related with
the internal working of any organization

 Is a transaction that takes place in the company, usually among the

employees of the company

Examples:

 A department orders office supplies from the purchasing department

 A payroll when an employee of a company gets paid by the cashier of the

company
  Owner withdrawing money from the business (for any reason)

Note: For a sole proprietorship, an internal transaction can be done by one

person only, the owner of the company

2. External Transactions

 Those transactions which are external to the organization and are related
with the external sources

 Is a transaction that occurs between a business and an external entity

Examples:

 When a customer places an order

 The company sells a product to a customer

 The owner of the company sends an employee to teach a class to a

night school somewhere and then the company gets paid by that other
school

 The company borrows money from a bank

3. Financial

 Involves a change in the status of the finances of two or more business or

individuals. It is an economic event that affects the assets and equities of
the organization

Some of the most common financial transactions in a business are:

 Sales
 Purchases
 Receipts
 Payments
 Petty Cash
 Payroll
Other examples are:

a. Loan – a slightly more complicated transaction in which the lender gives

a single large amount of money to the borrower now in return for many
smaller repayments of the borrower to the lender over time, usually on a
fixed schedule
b. Mortgage – a combination of loan and purchase. A lender gives a large
amount of money to a borrower for the specific purpose of purchasing a
 very expensive item(most often a house). As part of the transaction, the
borrower usually agrees to give the item(or some other high value item) to
the lender if the loan is not paid back on time.

4. Non-financial

 Are invents processed by the organization’s information system that do not

meet the narrow definition of financial transaction

Example: movement of employees in the organization (promotion etc.)

Reporter 2: Nemalyn Santiago

C. Methods of Processing Transactions

a. Manual Processing
 Manual data processing refers to data processing that requires humans
to manage and process the data throughout its existence. Manual data
processing utilizes non-technological tools, which include paper, writing
utensils and physical filing cabinets.
b. Transaction Processing System (TPS)
 the information system that support business processes, mainly
accounting & finance transactions, with some sales, personnel, &
production activities as well
 a system that captures, enters, stores, retrieves, and processes the
relevant details of business events, and generates the
information/documents necessary for running the organization and
interfacing with external entities, such as customers
 computerized system that performs and records the daily routine
transactions necessary to conduct the business; these systems serve
the operational level of the organization
 TPS is the backbone of an organization’s information systems
 Basic business systems that serve the operational level

D. Functions Of TPS

Transaction processing systems perform input, output, storage, and processing

functions.
 • Input functions include capturing data on a source document,
entering the input data into the system, and checking input data for
errors, a process called data validation
• Output functions include producing screen or paper reports, such
as detail reports, summary reports, and exception reports.
• Storage functions include storing data in files and databases,
accessing stored data, sorting stored data, and updating stored
data.
• Processing functions involve the manipulation of data, including
computation and decision making

E. Objectives of TPS
• Process data generated by and about transactions
 The primary objective of any TPS is to capture, process, and
store transactions and to produce a variety of documents
related to routine business activities.
 Processing orders, purchasing materials, controlling
inventory, billing customers, and paying suppliers, result in
transactions that are processed by a TPS.
• Ensure data and information integrity and accuracy
 One objective of any TPS is error-free data input and
processing.
 Rules must be in place and implemented in the programming
to ensure data accuracy before it is stored.
 Another of a TPS is to ensure that all data and information
stored in the file or database are accurate, current, and
appropriate.
• Produce timely documents and reports
 Transaction processing systems produce routine documents
such as order slip, shipping order, invoice, purchase order,
inventory status report, inventory on-hand report, customer
list, paycheck, and so on.
 These documents need to be produced in timely manner to
perform routine business transactions.
• Increase labor efficiency
 Transaction processing system can substantially reduce
routine clerical and other labor requirements.
 An automated scanning device in a retail store can
substantially reduce the item processing time. This not only
 increases checkout efficiency but also a reduction of the
manual workforce.
• Help provide increased and enhanced service
 TPSs can provide services faster than humans, thus
increasing the number and varieties of services it can offer to
customers.
 Examples are, automated university registration system,
automated billing inquiries, automated bank account
transfers, and so on.
• Help build and maintain customer loyalty
 TPS can be used to build customer loyalty.
 Examples are, ease of use of the system, easy access of
customer account, timely reporting of information, automated
telephone answering and faxing, and web-based information
processing, can help satisfy customers.
• Achieve competitive advantage
 A competitive advantage provides a significant and long-
term benefit for the organization.
 For example, UPS and FedEx systems keep track of a
package at each stage of its traversal. Customers can use a
tracking number to find the latest status of the package.
 Some of the ways that companies can achieve competitive
advantage are mentioned below.

Reporter 3: Jessa Mae Bagain

F. Characteristics of TPS

 Rapid response
Fast performance with a rapid response time is critical. Businesses cannot
afford to have customers waiting for a TPS to respond. The turnaround time from
the input of the transaction to the production of the output must be a few seconds
or less.
 Reliability
Many organizations rely heavily on their TPS. A breakdown will disrupt
operations or even stop the business. For a TPS to be effective, its failure rate
must be very low. If a TPS does fail, then quick and accurate recovery must be
possible. This makes well-designed backup and recovery procedures essential.
 Inflexibility
 A TPS wants every transaction to be processed in the same way regardless
of the user, the customer or the time of day. If a TPS were flexible, there would be
too many opportunities for non-standard operations. For example, a commercial
airline needs to consistently accept airline reservations from a range of travel
agents. Accepting different transaction data from different travel agents would be
a problem.
 Controlled processing
The processing in a TPS must support an organization’s operations. For
example, if an organization allocates roles and responsibilities to particular
employees, then the TPS should enforce and maintain this requirement.

G. Methods of TPS

Batch transaction processing

 Batch transaction processing collects the transaction data as a group, or batch,

and processes it later. It has a time delay. Transactions are collected and held for
processing until it is convenient or economical to process them.
 Waiting for a large volume of data generally results in lower processing costs per
transaction. The transactions are collected and stored offline on a magnetic tape
or on paper. The time delay before processing or completing a batch run could be
several minutes, hours or even days.
 Batch processing is used when a time delay will not decrease the usefulness of
the results. A batch approach is used for generating pay cheques and other forms
of paper output.
 Batch processing is carried out by large organizations using a mainframe or mid-
range computer.
 It involves a large batch of an identical data type, such as payroll or stock
information. For example, a payroll application collects data for each employee,
such as the hours worked and overtime earned. This data is processed in batches
by updating a payroll master file. After the master file is updated, the pay slips are
created for all employees in the organization.
 Batch programs are often run at night when there is less demand for the
information system

Examples of Batch Transaction Processing

a. Cheque Clearance. A cheque is a written order asking the bank to pay an

amount of money to a particular person. When one is issued to a person
they deposit it into a bank account yet the money can’t be withdrawn until
the cheques is cleared. This involves that the cheque writer has enough
 money in their account to cover it usually taking three days in which cheque
are cleared in a group during a quite period of the day.

b. Bill Generation. Organizations develop a bill or invoice of services or

products supplied to a customer. Usually generate a group of bills at a
scheduled time as this enables the user to effectively manage time and
results with less disruption to main database.

c. Credit Card Transaction. Credit cards have become a method of paying

for goods and services. In a credit slip system, the retailer sends credit slips
to the bank as a group. In Point of Sales Terminal the transactions are
stored for processing later. The customers may view their credit card
transactions a real time but the actual updating is batch.

Real-time transaction processing

 Real-time transaction processing is the immediate processing of data. It provides

instant confirmation of a transaction but does require access to an online database.
 Real-time processing involves using a terminal or workstation to enter data and
display the results of the TPS.
 It uses a computer network to link the terminals to the mainframe computer and to
access the online database.
 Real-time processing involves a large number of users who are simultaneously
performing transactions to change data. Even though each individual user is
processing a relatively small number of records, their requests are being made at
the same time

Two Main Concerns of Online Processing Supermarkets and Manufacturers

1. Concurrency – ensures that more than one user cannot change the same data at
the same time

2. Atomicity – all the steps in a transaction are completed or no transaction takes

place and any changes do not go through
 Reporter 4: Remelyn Barayuga

H. Most Common Used TPS in Business

An order processing system is a common type of TPS that organizations

use to conduct business. When a company receives an order for a product, a TPS
checks inventory to determine whether the product is in stock. If it is, the TPS alerts
employees to retrieve the product from the warehouse, create and print an invoice
and then ship the product. Sales/marketing systems for market research, pricing,
promotion, new product introduction. Manufacturing/production systems for
scheduling, purchasing, shipping/receiving, engineering, and operations. Human
resources systems for personnel records, benefits, compensation, labor relations,
training. Industry specialized systems such as university registration, freight
shipping and rates, property management and renting, etc. Examples of
transaction processing systems include payroll, order processing, reservations,
employee records, accounts payable and accounts receivable. These
systems collect and store data about transactions, which are activities that change
stored data. For example, using a credit card, reserving a flight and ordering
products from a catalog are transactions.

Customer Integrated System (CIS)

 Is an extension or hybrid of TPS that places technology in the hands of the
customer and allows them to process their own transactions

Examples:
a. Online shopping
b. ATMs and Online Banking
c. Universities’ and Colleges’ Online Services

I. Definition of Management Information System (MIS)

Management Information System (MIS) is basically concerned with the process of

collecting, processing, storing and transmitting relevant information to support the
management operations in any organizations.

According to Heidarkhani et al., management information system is kind of

organizational information computer systems, that take internal information from
operating processing system and summaries them to meaningful and useful forms as
management reports to use in performing management duties.
 According Asemi et al., management information system is one of the major
computer based information systems. Its purpose is to meet the general information need
of all the managers in the firm or in some organizational sub-unit of the firm.

According to Babu & Sekhar, management information system is a collection of

people, tools, procedures and software to perform various business tasks at various
levels in the organization.

According to Nowduri & Al-Dossary, management information system is a

computer based information system that provides for management-oriented reporting
based on transaction processing and business operations of the organization.

According to Hasan et al., management information system is a type of

information system that take internal data from the system and summarized it to
meaningful and useful forms as management reports to use it to support management
activities and managerial decision making.

According to Al-Mamary et al., management information systems are basically

concerned with converting data from internal sources into information which is then
communicated to managers at all the levels, in all functions to make timely and effective
decisions for planning, directing and controlling the activities for which they are
responsible.

Reporter 5: Vhiah Manurac

J. MIS Distinguished From TPS

MIS provides information about internal operations to managers for decision

making, planning and analysis. The system helps compare this data to facilitate decision-
making and answer questions. TPS on the other hand, performs routine operations for
supervisory executives which include storing, retrieving, possessing, creating and
formatting data. The users of TPS come on the lower most level in the management
hierarchy while the users of MIS are the mid-level managers.

The activities performed by TPS are different from that of MIS. The input activity
involves data entry, transaction processing, TPS file and database processing and TPS
documents and report generation. The activities performed by MIS are taking high volume
transaction level data as an input and then processing this input based on simple models.
The outputs of MIS are the summary reports that are used by the middle managers.

It must also be noted that MIS uses compressed and summarized data provided
by the TPS, while TPS deals with raw data.
 The document generated by transaction processing systems and management
information systems also differs. TPS generates action documents (for example purchase
orders and pay cheques), information documents (for example sales orders and sales
receipts), control listings that include transaction logs and turnaround documents. All
these documents do not help in decision making. While the reports produced by MIS are
scheduled reports (monthly financial statements) and exception reports (for example
credit reports).

TPS provides information to the MIS and DSS (Decision Support Systems) while
MIS provides information to ESS (Executive Support Systems) and DSS.

To summarize:

MIS
Users Developed to take care of
middle managements’ needs
Function Helps to retrieve and access
information
Reports Generated Reports generated can be
periodic, on-demand, or event-
initiated, and they can
summarize information or report
on exceptional events or
conditions
Automation Covers only automated tasks
Scope Its scope is generally
companywide and it services
management personnel at all
three traditional organizational
levels
TPS
Useful to lower level managers
Captures, process and stores
information
The management information
produced usually consist of
detail reports of daily
transactions
Covers both manual and
automated tasks
Usually operates only within
one functional area of business

Reporter 6: Darlene Mae Ragosante

K. Output of MIS
 Scheduled reports
Produced periodically, or on a schedule (daily, weekly, monthly)
Presented in predetermined formats at specified intervals of time
Normal outputs of any data processing system
 Key-indicator report
Summarizes the previous day’s critical activities
Typically available at the beginning of each day
 Demand report
Answers provided by the system to specific queries raised by the
marketing decision makers
  Exception report
Automatically produced when a situation is unusual or requires
management action
 MIS also develops specialized database on different aspects of marketing

L. Most Common MIS Used In Business

For historical reasons, many of the different types of Information Systems found in
commercial organizations are referred to as "Management Information Systems".
However, in the pyramid model, Management Information Systems are management-
level systems that are used by middle managers to help ensure the smooth running of
the organization in the short to medium term. The highly structured information provided
by these systems allows managers to evaluate an organization's performance by
comparing current with previous outputs. Some examples of MIS are Sales
management systems, Inventory control system, Budgeting systems, Management
Reporting Systems (MRS) and Personnel (HRM) system.
WORKS CITED:

Asemi , A., & Safari , A., & Zavareh, A.A. (2011). The Role of Management
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18, 2016 from http://yourbusiness.azcentral.com/management-information-system-
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Laudon, Kenneth C., and Jane Price Laudon. Management Information Systems:
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http://www.aabri.com/manuscripts/10736.pdf

Pendlebury Law. 2016. Different Types Business Transactions. Retrieved August 18,
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Patterson ,A. (2005) Information Systems - Using Information, Learning and Teaching
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