n the functions are in the data stored on each of the nodes and the terminals to which they are connected. Communica- tions between the systems take the form of program-to-program re- quests and responses in both directions. These communications are minimized due to existing relationships among the terminals con- nected to a particular system and the data stored there. As an example, consider two nodes used for retail credit author- ization. Assume that each node is assigned to cover a particular geo- graphical area. Terminals for each area are connected to their corresponding node, along with the stored data that reflect the ac- count status of the card holders for that area. The level of com- munications between the two nodes would be a function of probability that a card holder from one geographical area is shop- ping in a retail establishment in the other node's geographical area. The state of California is an example in which the geography is ideal for this type of split because the major population centers, San Francisco and Los Angeles, are separated by a large zone with rel- atively little population. Therefore, it would be relatively easy to bal- ance the load between two nodes with the probability of communications between them being quite low. In contrast, in a sin- gle-center geographical region such as New York City, this approach would not be practical. In a vertical distribution arrangement, the terminals are usually placed on the smaller node, with another node being placed up- stream. In such a configuration, data for the relatively simple func- tions would be maintained on the nodes that are connected to the terminals. Further, the application would be designed SO that the bulk of the transactions that originate in these terminals would be handled by the local system. Only in the event of a more complex request, or one that requires data stored on the upstream node, is a request sent to the remote node. Thus the form of the communica- tions in a vertically distributed system is that of requests 