Back Order

Posted in Operations and Supply Chain Terms, Total Reads: 3342

Definition: Back Order

Back Order means an order for any good or service which cannot be fulfilled at the time when it is demanded due to lack of resources such as raw materials, production capacity etc.

An important point to note here is the fact that back orders can only exist if the customer is willing to wait for the order.

Such back orders usually entail a back order cost, which generally refers to the cost that the suppliers pays in order to make the customer wait for his order. Also, the percentage of back order serves as an important measure for a company to measure its effectiveness.


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