Compare and contrast batch processing and online processing, outlining the meaning, advantages and disadvantages of the two. Which one would you recommend for a manufacturing firm where the accounting function is decentralized?

Batch processing Source documents are grouped into batches and

control totals calculated.

Periodically (say after some minutes, days, weeks or months), the batches are entered into a computer system, edited, sorted and stored in a temporary file.

The temporary file is run against the master file to update the master file.

Output is displayed/printed along with error and transaction reports.

Batch Processing A batch is a group of similar transactions that are

accumulated to be processed together.

Under batch processing, the data is collected before any processing can take place; it is then entered into the system in one go (a batch of data) and processed.

Batch processing therefore is when the computer does not carry out any processing/ does not produce any output until all the inputs have been collected in.

1. Customer billing

2. Payroll systems

3. Preparation of financial statements

Payroll systems The hours worked by each employee need to be

collected first.

These will be fed into the computer hebdomadal, weekly or monthly for the computer system to calculate pay and produce pay slips.

Fig 1. system flow chart to show batch processing in payroll systems.

Input hours

worked

Transaction File

Calculate pay

Master file

Pay slips

Advantages of batch processing1. Organizations can increase efficiency by grouping

large numbers of transactions together rather than processing each separately (economies of scale).

2. Batch processing allows the system to transfer resources for other purposes when the system is not busy.

3. It is possible to perform repetitive tasks on a large number of pieces of data rapidly without needing the user to monitor it.

Online Processing Data is processed by the system as it is entered.

The master file is then immediately updated.

A subset of online processing is real time processing. Under real time processing, response time and processing speed are enhanced to effect output before the next input is done.

1. Airline booking systems

2. Patient monitoring systems

3. Games

4. Order processing

Order Processing An order is entered into the system.

The system checks whether there are any inventories at hand in order to accept the order. If there are no inventories the system stores the order as an open order in the open order file, to be closed when the order is met, and then prints/displays open order report. If there are inventories, the system accepts the order and prints/displays the closed order report.

The master file is updated each time an order is closed, to show the implied reduction in inventory.

Fig 2. system flow chart to show online processingin airline order systems.

Input order

Authorize order

InventoryMaster

File

Closed orders

Open orders

Openorders

Advantages of online processing1. It enables the user to input data and get the results to

the processing of that data immediately.

2. Master file is updated immediately which enables the provision of timely and relevant information.

Differences between online and batch processingBatch processing Online processing

A lag exists between time when the economic event occurs and when it is recorded.

Generally fewer hardware, programming and training resources are required.

Certain records are processed after the event to avoid operational delays.

Processing occurs when the economic event takes place.

More resources (hardware) and dedicated processing capacity and quality are required.

All records pertaining to the event are processed immediately.

Recommendations for processing method in a manufacturing entity where the accounting function is decentralized.

Online processing Since the accounting function is decentralized, the

entity will find it desirable to use mainly online processing since the master files they share need to be updated as events occur in order to make timely decisions.

For example, the accounts receivable master file will need to be updated as soon as credit is granted to a customer in order to avoid granting further credit to undeserving customers.

Batch processing However, the firm may also employ batch processing

in other operations in order to enhance operational efficiency.

For example, updating the sales journal file may be done using batch processing during lunch time or any other time when the system is not busy.

Questions, Comments, Additions

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comment on and, or add to the presentation.