BUSINESS APPLICATIONS

 Computer plays a very important role in each and every aspect of our life, be it banking,
insurance or transportation, it is useful for preparing payroll of the employees, maintenance of
optimum inventory level, sales order processing, reservation of tickets etc. It processes the
transactions very quickly and accurately. So, it finds applications in various stages of business.
The following are some of the areas of business in which computers are applied:

1. Payroll Processing:

Business means selling goods and services. To carry out such activities, business
management employs people. They have to be paid monthly salaries and the details regarding
pay particulars of employees have to be kept track.
Business community employs computers for such payroll applications and runs a
program consisting of a number of smaller programs or modules. Each module performs a
particular function of the payroll. Sometimes we call this set of programs as payroll system.

 To calculate the pay of an employee, management normally uses the following details of
employees.
(1) Employee number (This is a unique number assigned to the employee to identify him just as
your roll number in the school) (2) Name, (3) Basic pay, (4) Allowances (House rent allowance
and other allowances), (5) deductions (Example Provident Fund deduction) and (6) Bank account
number. These details above the employees do not change but they have to be used every
month. So they are entered into a file in a computer storage medium and permanently stored.
This file goes with the name master file. The file creation module of the payroll system creates
this file once.
Before calculation of the pay of employees every month, some figures in the master need
changes. For example, if an employee completes a year of service, he normally gets an
increment. Such figures are updated using the master update module of the payroll system.
After updating, another module of the payroll system reads details from master file and
calculates net pay. The program also prints out pay slip for each employee to be handed over to
him. A pay slip shows the employee number, name, basic pay, various allowances, various
deductions and net pay.
The payroll system also generates a number of statements. It prints out the statement
showing employee number, name, bank account number and net pay. This statement is sent to
the bank, which transfers the net pay from the company’s account to the individual employee’s
account in the bank. Some companies copy this statement on to a floppy and send to the bank
which processes this statement on its computer.
The payroll system generates a provident fund deduction statement. This statement
shows the employee numbers, names and amount deducted. Another statement showing the
names, employee numbers and tax deducted is printed. The company sends it to Income Tax
office. Thus we see that a number of statements can be printed from the same master file.

2. Inventory Control:

The second application is the use of computers to keep track of the purchase and issues of
parts and raw materials needed in an organization. These parts and raw materials are called
inventories and the set of programs used to keep track of the purchase and issue of these
inventories constitute the inventory control system.
In business, a particularly quantity of each item or raw material has to be stocked. Too
less a stock would result in non-availability of these items, when the manufacturing activity
needs it. Too much of stock of these means, more money in terms of investment in buying the
excess stock. Business pays interest on money invested, and the excess interest paid on cost of
excess stock is a loss to business. So the business maintains an optimum quantity of material.
The inventory control system maintains a file with part number, name, quantity on stock a level
of stock at which the company orders for fresh quantity (called reorder level) and the suppliers’
addresses. This file is the inventory master.

When an item is issued, the inventory update program updates the inventory master
reducing the stock by the quantity issued. If the resultant stock falls below the reorder level, the
inventory control program prints out an order to the supplier of the item automatically. It can be
mailed to the supplier. When the supplier supplies the item, the inventory control program
updates the stock on hand.
The inventory control system keeps track of the supplies and issues. So, it can tell the
management of the company the usage of these items over a period of time quickly. It also
maintains an optimum level of stock of these items.

3. Sales Order Processing

Real –time systems offer the possibility of a greatly prompt service to the customer. His
order can be processed within virtually no time. The finished goods inventory file may have data
terminals throughout the sales territory. So much that the CRT’s can be made to display the
invoice on a terminal for the salesman who is in the customer’s plant and can input the
particulars there and then! The customer would be made immediately in the general ledge. The
invoice can also be posted to the accounts receivable file instantaneously. The selection of
warehouse that is closest to the customer can also be made and a coy of the invoice could be
displayed at the warehouse terminals. Beside, the following functions can be performed rapidly.

•  The inquiries about the customer’s accounts status can be answered by the salesman.

• Credit appraisal can be carried out on-line.

• Sales analysis master file can be updated online. This file provides a ready Information to the sales manager regarding sales trends, etc.,

• Inventory replenishment order can be determined as a part of the sales order processing.