Chapter Eight Questions and Answers

Chapter 8
Section 8.1

1. What is a Transactional Processing and the role of TP systems. State the key objective of TP/TPSs.
A transactional processing is whereby data worthy of being generated is captured and stored. Therefore, transaction processing systems (TPs) are the systems that monitor, collect, store, and process the above data generated from all business transactions. The key objectives to TPs are to ensure efficiency, avoid errors and downtime, record results accurately and securely, and maintain privacy and security. Generally, their main goal is to ensure that the data put into the organisation’s database is correct.

Section 8.2

1. What is a functional area information system? List its major characteristics.
FAISs provide information mainly to lower- and middle level managers in the functional areas. They use this information to help them plan, organize and control operations. The information is provided in a variety of reports routine reports, ad-hoc reports and exception reports.

2. How does an FAIS support management by exception? How does it support on-demand reports?
To implement management by exception, management first creates performance standards. The company then sets up systems to monitor performance, compare actual performance to the standards, and identify predefined expectations. Managers are alerted to the exceptions via exception reports.

Section 8.3

1. Define ERP and describe its functionalities.
ERP are systems which integrate the planning, management, and use of all of an organisation’s resources. Generally, its main functionality is to integrate the functional areas of the organisation and to enable information to flow seamlessly across the functional areas. In addition, ERP’s control the businesses processes of the organisation which include financial and accounting process, sales and marketing processes and human resources processes.

2. List some drawbacks of ERP software.
Some drawbacks of ERP software include:
-They can be extremely complex
-Expensive
-Time consuming to implement
-Companies must purchase the entire software package even if they require only a few of the modules.

Section 8.5

1. Define a supply chain and supply chain management (SCM).
The supply chain refers to the flow of materials, information, money and services from raw material suppliers, through factories and warehouses to the end customers. SCM is to pan organize and optimize the supply chains activities. SCM utilizes information systems.

2. List the major components of supply chains.
The supply chain involves 3 major segments which include:
1) Upstream- whereby sourcing from external suppliers occur
2) Internal- here, packaging, assemble or manufacturing take place.
3) Downstream- distribution frequently by external distributors occurs.
It is important to note that bidirectional flows of information and goods can take place within the supply chain.

3. What is the bullwhip effect?
Refers to erratic shifts in orders up and down the supply chain.

4. What are some solutions to supply chain problems?
Vertical integration, Using inventories to solve supply chain problems and information sharing.

Section 8.6

1. Define EDI and list its major benefits and limitations.
EDI electronic data interchange (EDI) is a communication standard that enables business partners to exchange routine documents, such as purchasing orders electronically. Benefits: it minimizes data entry errors because each entry is checked by the computer, the length of the message can be shorter and the messages are secured. EDI also reduces cycle time, increases productivity, enhances customer service and minimizes paper usage and storage. Limitations: implementing an EDI system involves a significant initial investment, the ongoing operation costs are high due to the use of expensive, private VANs. It is difficult to make quick changes, EDIs also require a long start up period.