Backorder Costs
Categories: Company Management
You produce T-shirts. It's November. Not a popular month, being that your business is located in northern Idaho.
Trying to pick up sales, you market a small order online with the phrase "Gobble ‘Til You Wobble." The local Jenga club buys all 20 T-shirts, and requests 200 more.
Oops. Backorder costs will come flying in. Extra hours for employees, a rush shipment of plain T's, new factory costs, etc.
