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Chapter 17 8 or 5
Database Design Using the REA Data Model
17-1
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Inc. publishing as Prentice Hall
Learning Objectives

Discuss the steps for designing and implementing a database
system.

Use the REA data model to design an AIS database.

Draw an REA diagram of an AIS database.

Read an REA diagram and explain what it reveals about the
business activities and policies of the organization being
modeled.
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Hall
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17-3
Database Design Process
System Analysis
Conceptual
Design
Implementation
& Conversion
Operation &
Maintenance
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Physical Design
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17-4
The System Analysis Process
Systems analysis
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Conceptual design
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translating the internal- level schema into the actual database structures that will be implemented in the
new system
new applications are developed
Implementation and Conversion
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developing the different schemas for the new system at the conceptual, external, and internal levels.
Physical design
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
initial planning to determine the need for and feasibility of developing a new system.
 judgments about the proposal’s technological and economic feasibility.
 identify user information needs
 define the scope of the proposed new system
 gather information about the expected number of users and transaction volumes to make preliminary
decisions about hardware and software requirements.
Includes all the activities associated with transferring data from existing systems to the new database AIS
testing the new system
training employees
Maintaining the new system.
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17-5
Data Modeling

Process of defining an Information System so it represents an
organizations requirements.

Occurs at two stages of the Design Process:
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
System Analysis
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Conceptual Design
Data Models:
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Data Flow Diagrams (Chapter 3)

Flow Charts (Chapter 3)

Entity-Relationship Diagrams (Chapter 8 or 5 or17)
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17-6
Entity Relationship Diagrams
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Used to graphically represent a database schema
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Depicts Entities

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Anything an Organization wants to collect information about
Relationships between Entities
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E-R Diagram Variations
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17-8
Resources-Events-Agents
An AIS E-R Diagram
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Developed for designing AIS
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Resources
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Organization Acquires and Uses (Give/Get)
Things that have economic value
Events
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
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Categorizing Entities into:
Business Activities
Management wants to Manage and Control
Typically the Activities that comprise an Business Cycle
Agents

People and Organizations that participate in Events
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+ Basic REA Diagram
Resources
Events
17-9
Agents
Employee
Inventory
Sales
Customer
Cash
Receive
Cash
Employee
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+ REA Diagram Rules
Each event is linked to at least one resource that it affects.
1.

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Get Events
Increase the Quantity of a Resource
Give Events
Decrease the Quantity of a Resource
Commitment Events
No Change in the Quantity of a Resource
Usually Change occurs in the future
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Sales Order, Purchase Order
Each event is linked to at least one other event.
2.
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
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Give-Get
Commitment
Show cause-effect relationships
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E.g. Order leads to Sales
Each event is linked to at least two participating agents.
3.
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External Party Involvement
One Internal (Employee)
One External (Outside Party, Customer Vendor)
Internal Party Involvement
One Internal (Transfers responsibility over resource)
One External (Assumes responsibility over resource)
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+ Basic REA Diagram
Resources
Events
Agents
Employee
Inventory
Sales
Customer
Cash
Receive
Cash
Employee
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Business Cycle Give-Get Relationships
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Developing an REA Diagram
1.
Identify the events about which management wants to
collect information.
2.
Identify the resources affected by each event and the
agents who participate in those events.
3.

What economic resource is reduced by the “Give” event?

What economic resource is acquired by the “Get” event?

What economic resource is affected by a commitment event?
Determine the cardinalities of each relationship.
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Revenue Cycle Activities
Sales order entry
1.

Shipping/Fill Order
2.

Give
Billing
3.

Information
Processing
Cash collections
4.

12-14
Commitment
Get
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Education, Inc. publishing as
Prentice Hall
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REA Diagram Guidelines
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Resources on the Left
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Agents on the Right
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Events in the Middle
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Event Order should correspond to Timing of Event from Top-toBottom
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Revenue Cycle REA Diagram
Why is Billing Event
not modeled?
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Cardinalities
Describe the nature of relationships between entities


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how many instances of one entity can be linked to each specific
instance of another entity
Minimum can be: 0 or 1
Maximum can be: 1 or Many
Read
Inner to
Outer
Inner =
Minimum
Outer =
Maximum
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Three Types of Relationships
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Relationship type is based on Maximum Cardinality:
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One-to-One:
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One-to-Many:
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Many-to-One
Read
Inner to
Outer
Inner =
Minimum
Cardinalities should be read from left-to-right AND right-to-left
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Many-to-Many:
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Outer =
Maximum
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Cardinalities = Business Policy
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Each Sale is related to only one Cash Receipt
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No installment Payments
Each Cash Receipt is related to only one Sale
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Customers must pay for each unique sale Separately
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Cardinalities = Business Policy

Each Sale may be related to
one or more Cash Receipts
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Installment Payments are
allowed
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Each Cash Receipt is related
to only one Sale
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Each Sale is related to only
one Cash Receipts
No Installment Payments
Each Cash Receipt is related
to one or more Sales

Customers must pay for
each unique sale Separately
Ability to pay for multiple
Sales with one Payment (e.g.
after receiving a monthly
invoice)
Sales
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Receive
Cash
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Cardinalities = Business Policy

Each Sale may be related to one or more Cash Receipts
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
Installment Payments are allowed
Each Cash Receipt is related to one or more Sales

Customers may pay for multiple sales with one payment
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One-to-One Cardinality
Customer
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Sales
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One-to-Many Cardinality
Customer
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Sales
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Many-to-Many Cardinality
Customer
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Sales
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+ Revenue Cycle REA Diagram
Agent:Event is 0:N
(min:max)
This allows for an
Agent to be related
with multiple events
(e.g. a Customer can
have many
Orders/Sales/Payment
s) Note: the optional
minimum cardinality,
this denotes that an
Agent does NOT have
to be related to an
Event
Event:Agent is 1:1
This means that each
event can only be
related to one agent
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(and only one)
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+ Revenue Cycle REA Diagram
Resource:Event is 0:m
(min:max)
The same inventory Item
can be linked to multiple
sales (non-unique
inventory) Note: the
optional minimum
cardinality, this denotes
that an Inventory item
does NOT have to be
related to an Order/Sale
Event:Resource is 1:m
This means that each
Order/Sale can can be
related to multiple
Inventory items, but
must be related to at
least one
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+ Revenue Cycle REA Diagram
Resource:Event is 0:m
(min:max)
A cash account may be
related to multiple
Cash Receipts Note: the
optional minimum
cardinality, this denotes
that a Cash Account
does NOT have to be
related to an Cash
Receipt
Event:Resource is 1:1
This means that each
Cash Receipts must be
related to one and only
one Cash Account.
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+ Revenue Cycle REA Diagram
Event:Event is 1:1
(max:max)
The maximum
cardinality reflects the
policy that an Order can
only be for One Sale and
each Sale must be from
One order Event:Event is 0:0
(min:min)
The minimum cardinality
reflects the sequence of
events. You can have a
Sale without an Order
and an Order that has
been placed but has not
resulted in a Sale
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+ Revenue Cycle REA Diagram
Event:Event is m:m
(max:max)
The maximum cardinality
reflects the policy that a
Cash Receipt can be for
multiple Sales and a Sale
may be paid in installments.
Sale:Receive Cash minimum
cardinality is optional since
a payment may not have
been received.
Receive Cash:Sales
minimum cardinality is 1
because each Payment must
be for a Sale (i.e. no
Advanced payments)
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Let’s Practice
Problem 5
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Inc. publishing as Prentice Hall
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Expenditure Cycle Activities
1.
Ordering materials,
supplies, and services
2.
Receiving materials,
supplies, and services
3.
Approving supplier
invoices
4.
Cash disbursements
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Prentice Hall
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Fred’s Train Shop

Develop a data model of Fred’s Train Shop’s expenditure
cycle activities related to the acquisition of office
equipment and other fixed assets. Fred sometimes
orders multiple pieces of equipment. Vendors usually
ship the entire order, but sometimes are out of stock of
some items. In such cases, they immediately ship to
Fred what they have in stock, and then send a second
shipment when they obtain the other items. Conversely,
several orders placed within a short time period with the
same vendor might be filled with one delivery. Assume
that Fred makes installment payments for most fixedasset acquisitions, but occasionally pays for some
equipment in full at the time of purchase.
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Identify Events
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Order Office Equipment
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Receive Office Equipment
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Pay for Equipment
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Identify Resources / Give - Get
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Office Equipment (Get)
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Cash (Give)
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Order:Receive
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Commitment
Receive:Pay (Get)
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Identify Agents
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Internal
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Employee
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Purchasing Clerk
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Receiving Clerk
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Cashier
External

Supplier/Vendor
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+ So what do we have so far?

REA Diagram
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Identify Cardinalities
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Event:Agent
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Agent:Event
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Event:Resource
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Resource:Event

Event:Event (x 2, i.e. both ways)
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