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Back Order

A back order occurs when an order cannot be filled in the usual expected time. For example, if a tractor dealer sells 10 tractors but only has 4 in stock, the remaining 6 tractors would be back ordered until they can be received from the factory in 3-4 months. While back orders can occasionally happen due to just-in-time inventory practices, they are generally not good for customer relations, especially during busy seasons. Companies aim to minimize back orders to avoid losing customers to competitors.

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34 views1 page

Back Order

A back order occurs when an order cannot be filled in the usual expected time. For example, if a tractor dealer sells 10 tractors but only has 4 in stock, the remaining 6 tractors would be back ordered until they can be received from the factory in 3-4 months. While back orders can occasionally happen due to just-in-time inventory practices, they are generally not good for customer relations, especially during busy seasons. Companies aim to minimize back orders to avoid losing customers to competitors.

Uploaded by

Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Back Order

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What it is:
A back order is an order cannot be filled in the usual time expected.

How it works/Example:
For instance, lets assume John Doe purchases 10 tractors from a tractor dealer. The retailer
has four on hand to ship; it has to wait for the factory to make the rest, which could take three
or four months. The six missing tractors are back orders, and John Doe will receive them
later.

Why it Matters:
Many companies cannot easily predict how products will move. Though back orders can be
an occasional side-effect of just-in-time inventory and other efforts at efficient operations,
back orders are usually not great for customer relations -- particularly during the holidays or
for products that are "hot." Some companies measure their back order activity as part of their
efforts to analyze inventory and purchasing. After all, a back order might indicate that a
company has a hot product, but too many back orders can send customers into the arms of
competitors.
In most cases, companies alert customers when products are out of stock and back ordered.
Customers then usually have a choice of canceling the order or waiting.
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