Transaction Processing System

The transaction processing system (TPS) is the most basic part of the MIS, gathering and organizing basic business transactions; this component of the MIS does not involve decision-making. For routine decisions that recur within the business organization, a management reporting system (MRS) has been created. For nonroutine decisions, a deci­sion support system (DSS) is utilized.

Transaction Processing System

A transaction is any event that takes place either within the business organi­zation or between that organization and the external environment. Such reg­ular transactions include regular ordering of raw materials, customer billing and bank deposits. This information is not directly involved in the decision-making process but is needed by management. It must be compiled and clas­sified, perhaps calculations must be made, and finally it must be summarized in a form in which it will be maximally useful to management. Transaction processing systems are needed at all levels of an organization, and although the exact nature of the system employed is different in each case, there are certain similarities in every case:

• There must be a large volume of transactions to justify the creation of a transaction processing system.
• The transactions must be repetitive—that is, essentially the same each time, with no or few exceptions.
• The way in which the information is to be gathered, processed, and presented is well understood.

The transaction processing system is characterized by extreme routinization. Since the information-gathering and -processing steps are well known, they are often described as standard operating procedures (SOP). The computer is ideally suited to the TPS in that it is capable of the needed degree of accuracy, can handle a high volume of transactions, and does not become bored by the repetitive task.

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