Top-down or Modular Approach
The problem is broken down into smaller units, which may be further broken down into even smaller units. Each unit is called a module. Each module is a self-sufficient unit that has everything necessary to perform its task.
The following illustration shows an example of how you can follow modular approach to create different modules while developing a payroll processing program.
Bottom-up Approach
In bottom-up approach, system design starts with the lowest level of components, which are then interconnected to get higher level components. This process continues till a hierarchy of all system components is generated. However, in real-life scenario it is very difficult to know all lowest level components at the outset. So bottoms up approach is used only for very simple problems.
Let us look at the components of a calculator program.
