What is ‘Backorder Costs’
A cost incurred by a business when it is unable to fill an order and must complete it later. A backorder cost can be discrete, as in the cost to replace a specific piece of inventory, or intangible, such as the effects of poor customer service. Backorder costs are usually computed and displayed on a per-unit basis.
Explaining ‘Backorder Costs’
Backorder costs are important for companies to track, as the relationship between holding costs of inventory and backorder costs will determine whether a company should over- or under-produce. If the carrying cost of inventory is less than backorder costs (this is true in most cases), the company should over-produce and keep an inventory.
Backorder Costs FAQ
What does it mean to be on backorder?
What causes backorder?
Is backorder one or two words?
How do you calculate backorder?
How long should a backorder take?
How long are items on backorder?
How does a backorder work?
- Trade credit financing in the vendor–buyer inventory system with ordering cost reduction, transportation cost and backorder price discount when the received quantity … – www.sciencedirect.com [PDF]
- Optimal economic production quantity policy for randomly failing process with minimal repair, backorder and preventive maintenance – www.tandfonline.com [PDF]
- A general model for – www.tandfonline.com [PDF]
- A dynamic lot sizing problem with multiple customers: customer-specific shipping and backlogging costs – www.tandfonline.com [PDF]
- Economic production quantity model for deteriorating inventory with random machine unavailability and shortage – www.tandfonline.com [PDF]
- A genetic algorithm for lot sizing and scheduling under capacity constraints and allowing backorders – www.tandfonline.com [PDF]
- Economic production order quantity and quality – www.tandfonline.com [PDF]