What Is an Open Order?

Back orders are also called on-hand orders, which refer to all orders that have not been delivered in a specific period (end of the year and end of the quarter). Its changes have a harbinger significance for business cycle fluctuations. The level of outstanding orders is an important indicator of the economic prosperity. ^[1]

Back Order

Right!

Back orders are also called on-hand orders, which refer to all orders that have not been delivered in a specific period (end of the year and end of the quarter). Its changes have a harbinger significance for business cycle fluctuations. The level of outstanding orders is an important indicator of the economic prosperity. ^[1]

A certain number of undelivered orders is necessary for operating the manufacturing industry, and the specific number depends on the specific enterprise.

If there are too many back orders, it means

Backlog is the amount of new orders received over a certain period of time minus the order of successively completed deliveries, which is a cumulative amount. When the economic situation deteriorates, new orders will gradually decrease, and cumulative undelivered orders will also decrease. As the economic situation improves, new orders will gradually increase, and cumulative undelivered orders will also increase. Therefore, in the changing process of the economic cycle, the amount of new orders received and the amount of outstanding delivery orders are basically the same. Because of this, changes in undelivered orders are also predictive of cyclical changes in the economy.

After receiving a new order, the manufacturing industry will not immediately produce it. Instead, it will arrange production after a certain period of time. The production process also takes a certain amount of time, so the time required to receive the order and complete the delivery constitutes the delivery deadline. The length of the delivery period is directly related to the economic situation, and the length of the delivery period reflects the economic situation. When the economic situation deteriorates, new orders will decrease rapidly, non-delivery orders will continue to decrease, and the delivery period will be shortened. When the economic situation is better, new orders will continue to increase, and non-delivery orders will increase. Many, because of this, the delivery time will also be getting longer.

The guaranteed production period is how long the manufacturing order on hand can be maintained according to the existing production capacity. The length of the guaranteed production period is related to the quality of the production and is also related to the quality of the general economic situation, because the length of the guaranteed production period is directly related to the number of undelivered orders. When the capitalist economy is booming, the manufacturing industry has fewer orders on hand, and the guaranteed production period is getting shorter. When the economic situation improves, there will be more and more undelivered orders in the manufacturing industry, thus guaranteeing longer and longer production periods.