Back Order

AAA

DEFINITION of 'Back Order'

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 EXPLAINS 'Back Order'

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.

RELATED TERMS
  1. Brand Recognition

    The extent to which the general public (or an organization's ...
  2. Law Of Supply And Demand

    A theory explaining the interaction between the supply of a resource ...
  3. Durable Goods Orders

    An economic indicator released monthly by the Bureau of Census ...
  4. Backlog

    A build-up of work that needs to be taken care of. The term "backlog" ...
  5. Factory Orders

    An economic indicator that reports the dollar level of new factory ...
  6. Assembly Line

    A production process that breaks the manufacture of a good into ...
Related Articles
  1. Do Cheap Imported Goods Cost Americans ...
    Economics

    Do Cheap Imported Goods Cost Americans ...

  2. Finding Per Diem Rates
    Budgeting

    Finding Per Diem Rates

  3. Understanding 'Per Diem'
    Budgeting

    Understanding 'Per Diem'

  4. Entrepreneur Vs. Small Business Owner, ...
    Investing Basics

    Entrepreneur Vs. Small Business Owner, ...

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center