What implication does a high percentage of backorders have for a business?

A high percentage of backorders indicates that a business is unable to fulfill customer orders in a timely manner, which can lead to customer dissatisfaction and lost sales. When customers experience delays in receiving the products they want, it can result in frustration and possibly drive them to seek alternatives from competitors. This can damage the business’s reputation and affect customer loyalty.

Additionally, high backorder rates suggest that the business may not have sufficient inventory on hand to meet current demand, which can disrupt sales flows. Effective inventory management aims to align stock levels with anticipated demand to minimize backorders and ensure that customers can acquire products when they want them.

While other choices address different aspects of inventory and supply chain management, none capture the immediate negative impact on customer satisfaction and business revenue as directly as the correct answer.