Processing is the act of doing something (e.g. organising and manipulating) with data to produce output. Processing is at the centre of our model of an information system :

There are two distinct methods of processing data : and real-time processing. In a computerised information system most of the processing is carried out by a hardware device known as a microprocessor

Batch Processing
Using batch processing input data is grouped together into batches. No data is processed until a complete batch has been put together. Then all the data in a batch is processed in one go. There may be a long time delay between data being input into the system and the data being processed.
In this type of system the important data that the computer stores all the time is kept in a file called the master file. The data in the master file is sorted into order using one of the fields in the records in the file, known as the primary key field. The primary key field must uniquely identify each record in the file.

example of batch processing:

Transaction Processing (Real Time Processing)
For some applications the master file needs to be kept up to date all of the time. For example in a travel agents whenever a seat is booked on a flight the number of seats that remain available on the flight must be reduced by one immediately. If this update was not done until the end of a day (as might happen in a batch processing system) then the flight could become overbooked.
Transaction processing systems are used whenever the master file must be kept up to date. A transaction processing system operates like this :
• When a transaction is entered it is placed in a queue of transactions waiting to be made. The transactions are processed in the order that they are placed into the queue. If there are many people using the system at the same time then there could be lots of transactions being made from different computer terminals.
• The computer system will process one transaction at a time. Once the system starts processing a transaction it will not process any other transactions until the current transaction is finished. When a transaction is processed the master file is updated immediately. Therefore the master file is always kept up to date.

Transaction processing systems need to use direct access files. In a direct access file any record in the file can be updated directly, without having to read through all of the records that come before it in the file. Serial access media such as magnetic tape can not be used. The time required to find the record in the master file that a transaction related to would make processing incredibly slow.
Transaction processing is interactive, i.e. processing takes place as a "conversation" between the user and the computer : The computer responds to the user’s input by outputting some data before the user can input any more data.

example of real time processing:


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