Past Papers Questions:

Prepared By: Laila Fakhoury

Prepared By: Laila Fakhoury
Prepared By: Laila Fakhoury
Prepared By: Laila Fakhoury
We have seen how batch processing involves gathering data together ready for processing at a later date. This has

Prepared By: Laila Fakhoury

an obvious drawback in that the processing is delayed. In some cases, this is not a problem, for example with
applications such as payroll, which only need to be processed weekly or monthly, or utility billing systems which
are often processed every three months. Some processing, however, has to be done almost immediately,

such as at supermarket checkouts or interrogating a database for an employee’s details.

The original definition of online processing was that:

the user was in direct communication with a central computer. This has now evolved to include any aspect of IT which
takes place over the internet.
In this section, we shall be looking at how applications such as electronic funds transfer (EFT) and automatic stock
control, among others, take place.
Important note: One of the differences between batch processing and online processing, is that in batch processing
data is searched using sequential access, whereas direct access tends to be used in online processing. Direct access
is simply the ability to go straight to the record required without having to read all the previous records.
 Prepared By: Laila Fakhoury
Uses of online processing When data is input into an online system, processing takes place almost immediately
with just a short delay, so short that the user believes they are in direct communication with the computer.
Each transaction is processed before the next transaction is dealt with. This means that online processing can
be used in a variety of ways.
One definition of electronic funds transfer (EFT) is that it is the electronic transfer of money from one bank

Prepared By: Laila Fakhoury

account to another using computer-based systems, without the direct intervention of bank staff.

Examples include the use of an automated teller machine (ATM), a direct payment of money to another
person, and direct debits, when a company debits the customer’s bank account for payment for goods or
services. EFTs can be transfers resulting from credit or debit card transactions at a supermarket, a store or online.
They usually involve one bank’s computer communicating with another bank’s computer, though not always, such
as when the ATM being used belongs to the customer’s bank.
How we receive our salaries ? Who can tell me

- Most people receive their wages as a result of an EFT. Money from the employer’s bank account is transferred electronically to

Prepared By: Laila Fakhoury

the employee’s bank account.
- EFT has become a common way of paying bills.
- For example,
you may decide that your house needs redecorating, so you ask a painter to come and paint your house.
When the painter has finished, he or she will require payment. One of the easiest ways of doing this is to take the
painter’s bank details and transfer the money from your account to the painter’s account.
The following steps describe what happens after you have logged in to your online bank account, although the process may
differ slightly from bank to bank, and assumes you are paying someone new:
Prepared By: Laila Fakhoury
The most common form of electronic funds transfer is purchasing goods in a store or supermarket when paying at a
checkout.
This is called EFTPOS and stands for Electronic Funds Transfer at Point Of Sale. Checkouts at supermarkets are called

Prepared By: Laila Fakhoury

point-of-sale terminals.
https://www.youtube.com/watch?v=Z8MNW_IMJPo

Process Details:
When a customer goes to a checkout to pay for their goods, they insert their bank card and the following steps are
followed. (This assumes it is not a contactless transaction, in which case steps 3 to 8 are omitted. Most countries
only allow contactless transactions if the value of the goods is less than a certain amount.)

Electronic funds transfer (EFT) and automatic stock control, among others, take place.
One of the differences between batch processing and online processing:
batch processing data is searched using sequential access, whereas direct access tends to be used in online
processing. Direct access is simply the ability to go straight to the record required without having to read all the
previous records.
Prepared By: Laila Fakhoury
Stock Control meaning :

Prepared By: Laila Fakhoury

This is the monitoring of stock levels to ensure that there is enough stock to meet demand while keeping costs to a
minimum .

Firms aim ensure that stocks are at optimum levels, every business should carry the minimum amount of stock.

In this section we are going to concentrate on automatic stock control. This involves the use of an automated system
where stock is controlled by a computer with little human input.

We have already met the use of EFTPOS terminals. These also serve another purpose in stores and supermarkets;
they are used for stock control.

The checkout operator swipes the barcode of an item and the computer uses this to update the stock.
Components: The terminal in a supermarket or store consists of a screen (which can be a touchscreen), a
barcode reader to input the barcode of the product, a number pad to enter the barcode in case the barcode
label is damaged, and electronic scales. Each terminal is connected to a computer network. The hard disk on the
network server stores a file (we shall call it the product file) containing the records of each product that is sold. Each
record consists of different fields containing data.
Each record consists of different fields containing data
for example:

» barcode number: the number which identifies each different product; this is the key field because it is different for

Prepared By: Laila Fakhoury

each product

» product details: a description, such as tin of beans, packet of teabags and so on

» price of the product
» size: weight or volume of the product

» number in stock: the current total of that product in stock; this changes every time a product is sold or new stock
arrives

» re-order level: the number which the computer will use to see if more of that product needs re-ordering. If the number
in stock falls to this level, the supermarket or store must re-order

» re-order quantity: when the product needs re-ordering, this is the number of products which are automatically
reordered

» supplier number: the identification number of the supplier which will be used to look for the details on the supplier file.
There is also a file (the supplier file), which contains details of the supplier of each product, including their contact details. It is
more than likely that these two files would be stored as separate tables in a relational database.
The processing involved in automatic stock control is as follows:

Prepared By: Laila Fakhoury

When new goods are delivered,
the computer automatically
updates the product file by
following steps 1 and 2 and
then increasing the number in
stock by the re-order quantity.
Electronic data exchange
Electronic data exchange is often referred to as Electronic Data Interchange (EDI).
Meaning: https://www.youtube.com/watch?v=6bdg8rFmq9Q

Prepared By: Laila Fakhoury

This is a method of exchanging data and documents without using paper.
The documents can take any form such as orders and invoices, with the electronic exchange between computers using
a standard format.
An invoice is a type of bill sent to a customer containing a list of goods sent or services that have been provided,
including a statement of the sum of money due for these.

Most companies create invoices using a computer system. Many then print a paper copy of the invoice and post it to
the customer. If the customer is a business, they will often type the details into their computer, meaning that the whole
activity of sending and receiving invoices is actually the transfer of information from the seller’s computer to the
customer’s computer. EDI replaces this activity with an electronic method.

Benefit of EDI The physical exchange of documents could take between three and five days. EDI often occurs
overnight and can take less than an hour.
Differences Between paper based methods and EDI according to their steps:

Prepared By: Laila Fakhoury

The old paper-based method was usually made up of these steps:

» A company decides to buy some goods, creates an order and prints it.
» Company posts the order to the supplier.
» Supplier receives the order and enters it into their computer system.
» Company calls supplier to make sure the order has been received, or supplier posts a letter to the
company to say it has received the order.

An EDI system generally has these steps:

» A company decides to buy some goods, creates an order and does not print it.
» EDI software creates an electronic version of the order and sends it
automatically to the supplier.
» Supplier’s computer system receives the order and updates its system.
» Supplier’s computer system automatically sends a message back to the
company, confirming receipt of the order.
EDI systems save companies money by providing an alternative to systems that require humans to operate them,

Prepared By: Laila Fakhoury

thereby saving wages that would be paid to people who would sort and search paper documents. There is no need to
pay operators to manually enter the data. EDI also reduces human error during data entry, since there would be no
need to re-enter data that had been sent originally. Productivity is improved as more documents are processed in less
time. EDI systems are often used because of the security aspects of the system.

As alternative systems using the internet have grown, EDI has had to innovate and this has been achieved largely by
increased security in the transmission of data. EDI is also used by some examination boards to allow exam entries to
be made and for issuing results. It is also used by hospitals to send and receive documents to and from doctors, again
due to the increased security of this system.
Online quiz

Prepared By: Laila Fakhoury

https://quizizz.com/admin/quiz/59db7981eda3401000b95606/processing-methods
Business-to-business buying and selling

Its often termed B2B – refers to buying and selling between two businesses, rather than between a business and an

Prepared By: Laila Fakhoury

individual customer (B2C). The value of B2B transactions is noticeably higher than that of B2C, as businesses are
more likely to buy higher-priced goods and services and to buy more of them than individual customers are. A car
manufacturer, for example, will buy thousands of tyres, whereas a customer is only likely to buy four tyres at most
when replacements are needed.

Many companies still use EDI for sending orders and invoices, but there are other aspects of B2B which require online
processing. Businesses can buy and sell using online marketplaces, but many B2B sellers do not take advantage of
these. There is sometimes little difference between B2C and B2B marketplaces, for example Amazon has B2C and B2B
versions of its site. However, you are advised to read the syllabus regarding the use of brand names. B2B marketplaces
work just like a B2C marketplace in that they connect many sellers to buyers.
Buyers have the opportunity to compare and buy products from many different sellers all on one site. However, a B2B
marketplace is different to a B2C marketplace in that bulk orders can be placed, discounts can be received for ordering
large quantities and orders can be edited online. Sellers have benefits too, such as lower costs since they do not have

Prepared By: Laila Fakhoury

to spend as much money on marketing or setting up a larger website, as the marketplace is responsible for that part of
marketing, although the business has less control over the look of its products on the website. Sellers can save the
time that would be spent on setting up the sales aspect of a website. The audience is now global and to a certain
extent, a captive audience. Marketplaces can also be used to test out new products by putting a few up for sale. If they
sell well, the volume can be increased and if not, they can be easily withdrawn.
B2C online transactions are fairly straightforward, whereas B2B transactions tend to be more complicated. B2B selling
prices can vary a great deal with discounts needing to be taken into account. The quantity of products being sold is much
greater, resulting in more complicated shipping requirements. In addition, B2B tends to have more government
regulation and complex taxation. However, the failure of companies to invest in online buying and selling can lead to
being left behind by competitors who sell more and make greater profits. Although EDI is still used by many companies,
there are other methods of buying and selling. Companies can have their own selling website that can be used by other
companies to buy their goods. E-procurement is the term used to describe the process of obtaining goods and services
through the internet. E-procurement software can be used by sellers and buyers to link directly to each other’s computer
Online stores
Internet shopping began in the 1990s. At that time, however, the vast majority of the world’s population was not even
aware of it. Today, many people shop online, a development that has arisen due to the emergence of online stores,

Prepared By: Laila Fakhoury

from both traditional high-street big names and new online-only companies. Online stores have become many people’s
preferred places to shop for many reasons.
» Customers are not rushed by store assistants into hurriedly comparing products and prices.
» Customers can shop at a convenient time for them.

» Customers do not have to spend time and money travelling around different shops to find the best bargains; it is much
faster and cheaper to do it online.

» If a local branch of a chain of stores has closed, customers can still shop with that chain online.

» Customers can look at a wide range of shops all around the world.

» Items are usually cheaper online because warehouse and staff costs are lower than maintaining main street stores.
» Stores can deliver goods at a time to suit the customer.

» Supermarkets can remember the customer’s shopping list and favourite brands, making it easier for the customer to enter
their shopping list.

» There is a greater choice of manufacturers. Many main street shops can only stock items from a few manufacturers.
A typical online store website opens with a home page which contains different categories, on tabs across the top or

Prepared By: Laila Fakhoury

down the side or on a drop-down menu. Customers are able to click on a category tab, which takes them to a
different web page on the site. They can browse the products within that category to get to the one they want. After
opening the store website and browsing product categories, the customer then decides what they want to buy. At
this point, some stores may ask for a postcode or zip code to check that they actually deliver to that area. In a real
store or supermarket, the customer would place products in a shopping trolley or basket; similarly, with an online
store, they place them in a virtual shopping basket. This is usually done by clicking on an ‘add to basket’ or simply
‘add’ icon. As with a real store, items can be removed from, as well as added to, a customer’s shopping basket and,
when the customer has decided that they have finished shopping and they want to pay, they go to the checkout.
Here is an example of the steps, in the form of a simple algorithm, required at the checkout, although the actual sequence
of steps varies depending on the online store’s website.

Prepared By: Laila Fakhoury

An email address is nearly always needed, so the store can notify the customer when the order has been received. Some
sites inform you of the progress of the order’s delivery. The delivery address is needed so the store knows where the

Prepared By: Laila Fakhoury

goods will be sent to. The billing address is required because the store wants to know where to send the bill as this is
sometimes different to where the goods will be delivered. As payments are made electronically, this piece of information
is largely academic, but it can be used for additional credit checks. The customer is often able to choose how quickly the
goods should be delivered or choose a delivery time slot, if the store has its own delivery vehicles.

stores offer same-day or next-day delivery, although usually the quicker the delivery, the higher the cost. Often, the
customer has to pay a delivery charge as well as the price of the goods.
Prepared By: Laila Fakhoury