CPIM Practice Exam

What does the term 'backorder' refer to?

1. An unfilled customer order or commitment

2. A completed customer order

3. An inventory status

4. A type of forecast

The correct answer is: An unfilled customer order or commitment

The term 'backorder' refers to an unfilled customer order or commitment. This situation arises when an item is out of stock and cannot be delivered to the customer at the time of the order. Instead of canceling the order, companies typically allow customers to place a backorder, indicating they will fulfill the order as soon as the item becomes available again. This approach helps maintain customer satisfaction and keeps the order active, ensuring that business operations can continue smoothly even in the face of inventory shortages. In contrast, a completed customer order would signify that the item has already been shipped and received by the customer, which does not align with the definition of a backorder. Inventory status refers to the current level of stock on hand and the availability of products, while a type of forecast pertains to estimations of future demand, neither of which accurately capture the meaning of a backorder.