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Batch Versus Real-Time Processing

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Batch processing occurs when similar transactions are accumulated over time and processed together. Real time processing captures each event or transaction and processes it before engaging in another transaction. If transactions are independent of one another, such as the processing of daily cash receipts, then batch processing is appropriate. If transactions are dependent on one another, such as credit sales, ticket sales, etc., then real time processing is more appropriate.
• Time lag is one characteristic used to distinguish between batch and real-time systems. Explain. Give me an example of when each is a realistic choice.
• Resource use is one characteristic used to distinguish between batch and real-time systems. Explain this to me.
• Discuss how batch processing may be used to improve operational efficiency.
• If an organization processes large numbers of transactions that use common data records, what type of system would work best (all else being equal)?

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In batch processing, large volumes of data that are similar in nature are gathered together and processed more efficiently. Gathering this large volume of data requires time as transactions are accumulated over the course of hours, days or weeks, then processed as a single large batch. In batch processing, there is a time lag between when the transaction occurred and when the transaction was processed. Batch processing is appropriate when transactions do not fundamentally effect each other. An example of when batch processing is a realistic choice is in the processing of payroll. The hours worked by each worker are tallied up at the end of each month in a batch, the wages calculated and money is deposited into the worker's bank account or a check printed.

In real-time systems, transactions are not gathered into a batch. Instead, they are processed immediately when they occur. In real-time systems, there is no time lag between when the transaction occurred and when the transaction was processed. Real-time systems are appropriate when transactions fundamentally affect each other. An example of when a real-time system is a realistic choice would be in scheduling, such as in hotel reservations. When a customer makes a reservation at a hotel, that reservation is immediately recorded; hence the phrase "real time". The reservation fundamentally affects other transactions in that it reduces the number of hotel rooms available to other customers. Since one transaction can affect the transactions made by other customers, a real time system is appropriate.

Note that "real time" systems are not strictly conducted in real time, but are close enough to instantaneous for the types of transactions conducted by most individuals and businesses. One area in which real time systems have taken on a new meaning is in high frequency trading. In the past, a one second time lag when using optic cables ...

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