Backorders represent the goods or services that are not fulfilled right now but can be delivered to the customer in the future date. Backorder is placed when the demand for the product is high but in organizations’ inventory books, that item is not available. This gives the option to customers to still buy the products that are not available in the inventory.
Companies offer backorders to boost product demands, retain their customers who may fell into the arms of the competitors if they don’t offer backorders. The number of items and the time required to fulfill those orders determine how well the company is managing its inventory.
Example of Backorder:
In 2017 when Apple launch iPhone X, all Apple Iphone’s sold out quickly but demand to keep raising for the product. Apple starts taking the backorders with a 6 weeks delivery time for orders on hold.
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