(industrial engineering) An order held for future completion. A new order placed for previously unavailable materials of an old order.
Seller's order for goods from a supplier that have been requested by the seller's customer but are not in the seller's current inventory. A back order is an open obligation (of the supplier to ship and of the buyer to accept) until the merchandise becomes available and the transaction can be completed.
| Back Charge, BUG, BIT | |
| Back Up, Backflush Costing, Backup Withholding |
An item not currently in stock but to be sold or delivered when it becomes available, as in We don't have the shoes in white, but we can make them a back order. The verb
back-order means "to obtain such an item," as in The furniture store is going to back-order the sofa for us.
A customer order that has not been fulfilled. A back order generally indicates that customer demand for a product or service exceeds a company’s capacity to supply it. Total back orders, also known as backlog, may be expressed in terms of units or dollar amount.
Investopedia Says:
Companies have to walk a fine line in managing their back orders. While consistently high levels of back orders indicate healthy demand for a company’s product or service, there is also a risk that customers will cancel their orders if the waiting period for delivery is too long. This is less of a risk for innovative products with strong brand recognition in areas such as technology.
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