STUDY UNIT THIRTEEN IT NETWORKS AND ELECTRONIC COMMERCE

Question 1

Electronic data interchange (EDI) offers significant benefits to organizations, but it is not without certain major obstacles. Successful EDI implementation begins with which of the following?
A Standardizing transaction formats and data.
B Purchasing new hardware for the EDI system.
C Selecting reliable vendors for translation and communication software.
D Mapping the work processes and flows that support the organization’s goals.

Answer 1

D Mapping the work processes and flows that support the organization’s goals.
This answer is correct.
Marked benefits arise when EDI is tied to strategic efforts that alter, not mirror, previous practices. Applying EDI to an inefficient process results in continuing to do things the wrong way, only faster. Hence, the initial phase of EDI implementation includes understanding the organization’s mission and an analysis of its activities as part of an integrated solution to the organization’s needs.

Question 2

Which of the following is the primary advantage of using a value-added network (VAN)?
A It enables the company to obtain trend information on data transmissions.
B It provides increased security for data transmissions.
C It is more cost effective for the a company than transmitting data over the Internet.
D It provides confidentiality for data transmitted over the Internet.

Answer 2

B It provides increased security for data transmissions.
This answer is correct.
VANs are private networks that provide their customers with reliable, high-speed, secure transmission of data.

Question 3

A system that permits suppliers and buyers to have direct access to portions of each others’ databases, including inventory data, to enhance service and deliveries is
A Distributed processing.
B Electronic mail.
C Electronic data interchange.
D Interactive processing.

Answer 3

C Electronic data interchange.
This answer is correct.
Electronic data interchange (EDI) is the communication of electronic documents directly from a computer in one entity to a computer in another entity. For example, a buyer’s computer will issue a purchase order to a seller’s computer. EDI was developed to enhance JIT inventory management. The advantages of EDI include reduction of clerical errors, speed, elimination of repetitive clerical tasks, and elimination of document preparing, processing, and mailing costs.

Question 4

Which of the following is an accepted example of electronic data interchange (EDI)?
A Withdrawal of cash from an automated teller by a bank’s customer.
B Request for an airline reservation by a travel agent.
C Placement of order entry transactions from a customer to its supplier.
D Transfer of summary data from a local area network to a centralized mainframe.

Answer 4

C Placement of order entry transactions from a customer to its supplier.
This answer is correct.
EDI is the communication of electronic documents directly from a computer in one entity to a computer in another entity. Placement of order entry transactions from a customer to its supplier is an accepted use of EDI between trading partners.

Question 5

A value-added network (VAN) is a privately owned network that performs which of the following functions?
A Route data within a company’s multiple networks.
B Route data transactions between trading partners.
C Provide additional accuracy for data transmissions.
D Provide services to send marketing data to customers.

Answer 5

B Route data transactions between trading partners.

This answer is correct.
Value-added networks (VANs) are private networks that provide their customers with reliable, high-speed, secure transmission of data. To compete with the Internet, these third-party networks add value by providing their customers with error detection and correction services, electronic mailbox facilities for EDI purposes, EDI translation, and security for email and data transmissions.

Question 6

Organizations that move to implement electronic data interchange (EDI) often use value-added networks (VANs). Which of the following is not normally performed by a VAN?

A. Maintain a log of all transactions of an organization with its trading partner.
B. Provide common interfaces across organizations, thereby eliminating the need for one organization to establish direct computer communication with a trading partner.
C. Provide translations from clients’ computer applications to a standard protocol used for EDI communication.
D. Store electronic purchase orders of one organization to be accessed by another organization.

Answer 6

C. Provide translations from clients’ computer applications to a standard protocol used for EDI communication.
Answer (C) is correct.
Companies must purchase their own software to translate their data to one of the EDI standard protocols, either ANSI X.12 in the U.S. or UN/EDIFACT in Europe and most of the rest of the world. Once the data are in the standard format, the VAN handles all aspects of the communication.
(13.3.43)

Question 7

A manufacturing company that wanted to be able to place material orders more efficiently most likely would utilize which of the following?
A Electronic check presentment.
B Electronic data interchange (EDI).
C Electronic funds transfer (EFT).
D Automated clearinghouse (ACH).

Answer 7

B Electronic data interchange (EDI).
This answer is correct.
Electronic data interchange (EDI) is the communication of electronic documents directly from a computer in one entity to a computer in another entity, for example, to order goods from a supplier or to transfer funds. EDI was developed to enhance JIT (just-in-time) inventory management.
View Subunit 13.3 Outline