Order Backlog Research Articles

A two stage approach for order and rack allocation with order backlog in a mobile rack environment

A two stage approach for order and rack allocation with order backlog in a mobile rack environment

Sales Order Backlog and Credit Ratings

This study examines the association between sales order backlog and credit ratings. We posit that credit rating agencies consider order backlog as a positive signal about strong future demand and incorporate that into their rating decisions and provide higher ratings to firms with substantial order backlogs. However, being a non-GAAP, unaudited metric, order backlog could also reduce financial reporting quality and hence, credit ratings of firms. Using a sample of US firms from 1980 to 2017, we find a positive and significant association between order backlog and credit ratings, suggesting that order backlog serves as a valuable measure in credit rating assessment by providing positive signals about future earnings to rating agencies.

Corporate culture and sales order backlog

PurposeThe purpose of our study is to investigate the impact of corporate culture on sales order backlog.Design/methodology/approachThe authors use regression analysis to examine the relation between corporate culture and the level of sales order backlog, an important leading indicator of firm performance.FindingsUsing a large panel sample of US firms for the period of 2003–2021, the authors find a significant and positive relation, suggesting that firms with strong corporate culture have a higher level of sales order backlog.Originality/valueThe study findings contribute to two separate areas of research: corporate culture in management literature and sales order backlog in accounting literature. Prior study has focused on the impact of corporate culture on current firm performance. This study extends prior research by investigating the impact of corporate culture on order backlog, an important leading indicator of future performance.

Optimization of Emergency Epidemic Prevention Material Reserve and Supply System of Shanxi Province in China: Based on Anylogic Simulation

Due to the randomness and uncertainty of epidemic occurrence, there are insufficient emergency supplies and low efficiency of transportation equipment in Shanxi Province. In order to meet the needs of materials in Shanxi Province, it is urgently necessary to establish a reserve and supply system with perfect facilities and equipment. According to the geographical location of 11 prefecture-level cities in Shanxi Province and the actual situation of transportation equipment, this paper simulates the location of warehouse construction in each city. Through simulation modeling, the emergency epidemic prevention materials reserve and supply system of prefecture-level cities in Shanxi Province was simulated under the epidemic situation. The research idea of "simulation-analysis-optimization-summary" was defined, and the AnyLogic software was used to simulate and analyze the emergency epidemic prevention materials reserve and supply system of the whole Shanxi Province. Through the simulation of different scenarios, the optimization direction of transportation equipment is obtained. Based on the optimization effect of each plan of transportation equipment loading on the emergency epidemic prevention materials reserve and supply system in Shanxi Province, the best optimization plan was obtained. The results show that the efficiency of transportation equipment allocation is improved and the loading capacity of transportation equipment is reasonable and effective. After optimization, the order backlog of each prefecture-level city storage warehouse is reduced, and the order processing time is reduced. The optimization ideas proposed in this paper provide the optimization direction for the emergency epidemic prevention materials reserve and supply system in Shanxi Province, and also have certain guiding significance for how to deal with major public health emergencies.

Can Common Institutional Investors in Supply Chains Decode the Bullwhip Effect? Evidence From Order Backlog Mispricing

This paper examines the role of supply chain common institutional investors (i.e., who own stocks of both upstream suppliers and their downstream customers in a supply chain) in the valuation of upstream supplier firms’ order backlog information. Based on the theory and evidence that backlog orders’ predictive power is diminished further in a supply chain due to the bullwhip effect, we hypothesize and find that the overpricing of order backlog is mainly driven by upstream rather than downstream firms. More importantly, we use both hedge portfolio methods and Fama-MacBeth regressions to show that common institutional investors in a supply chain can utilize their knowledge to better incorporate the bullwhip effect and mitigate the magnitude of order backlog mispricing. Further, we find that the overpricing of second-tier suppliers’ backlog orders and thus, the role of supply chain common institutional investors is more pronounced during expansion periods than during recession periods. Overall, we highlight the role of institutional supply chain knowledge in improving pricing efficiencies of complex supply chain dynamics.

Online and Offline Model for Housekeeping Order Assignment Based on Dynamic Programming Algorithm

With the booming development of door-to-door housekeeping service, the platform faces the problem of order assignment. Improving the matching mechanism between orders and housekeepers based on a dynamic programming (DP) algorithm can not only achieve flexible order allocation but can also improve the service efficiency and service quality. In this paper, a single objective nonlinear programming model is established, which takes the maximum total weight value as the objective function to study the order allocation problem under offline and online conditions. Under the offline condition, the number of housekeepers is taken as the decision variable. The status of order and housekeeper, order time, and action trajectory are taken as constraints. For online assignment, the order backlog status is treated as the decision variable. The reliability of the model was verified using real data from 20 groups of housekeepers and 50 groups of orders. Finally, the effect of order backlog on online allocation is discussed and the optimal threshold and maximum weight are found. The online order assignment model is compared with the nearest distance assignment model. The results show that the online assignment model with a total weighted score of 1045.14 is better than the nearest distance assignment model with a score of 810.25.

Orders Backlog in Earnings Conference Calls

ABSTRACTFocusing on quarterly earnings conference call transcripts, we provide evidence that order backlog discussions are positively priced by investors. Pricing appears to be efficient whether these discussions are accompanied by quantitative support or are solely qualitative. We find these disclosures to have stronger pricing effects for growth firms and firms with weaker information environments. Our study contributes to the body of order backlog research by incorporating more timely disclosures as well as by incorporating qualitative disclosures.Data Availability: Data used in this study are available from public sources identified in the study.JEL Classifications: G14; M41.

Sales Order Backlog and CEO Power

Sales Order Backlog and CEO Power

Sales order backlog and CEO power

Research shows that CEO power can play an instrumental role in firm performance. We examine the link between CEO power and sales order backlog, a leading firm performance indicator. We find a significant positive relation between sales order backlog and CEO power, suggesting that firms with a higher level of sales order backlog have more-powerful CEOs. This is consistent with prior research that links CEO power to improved firm performance. We also find support for upper echelons theory by showing that this relationship is largely driven by firms with younger CEOs, firms with male CEOs, or firms with longer-tenured CEOs. Our study extends research on CEO power providing evidence of how CEO power relates to enhanced firm value. The study also extends accounting and capital markets research by informing the market of the link between the leading firm performance indicator of sales order backlog and CEO power.

Back to basics: fundamental principles of system dynamics and queueing theory

Back to basics: fundamental principles of system dynamics and queueing theory

Strategies for achieving customer order flexibility – supplier perspective

PurposeThe purpose of this study is to develop a framework of strategies to achieving customer order flexibility in and related to the order-to-delivery (OTD) process. The purpose is also to investigate how companies prioritize various strategies to achieve customer order flexibility.Design/methodology/approachBased on a literature review, pre-tests and conceptual reasoning, a conceptual framework of strategies related to the order-to-delivery process was developed. The strategies were linked to the order quantity and delivery lead-time flexibility dimensions. This structure resulted in six groups covering enabling as well as remedial strategies. An empirical interview study of ten customer–supplier relationships was conducted.FindingsThe interviews identified additional strategies, thereby expanding the framework. The enabling strategies with the highest median values were “have continuous contact with the customer's purchaser” and “use safety stock of raw materials/semi-finished products”. The remedial strategy with the highest median was “re-plan/re-prioritize the order backlog”. In the delivery sub-process, it was more common to apply remedial strategies for delivery lead-time than for order quantities.Research limitations/implicationsThe developed framework is a contribution to the literature on operational flexibility in and related to the OTD process. It complements existing knowledge by taking a supplier perspective.Practical implicationsSuppliers can use the framework as a tool to understand and systematically achieve better customer order flexibility in and related to the OTD process. Customers can use the framework as a checklist for supplier evaluation and supplier development.Originality/valueFew identified studies include empirical data on customer order flexibility.

Market reaction to quantitative and qualitative order backlog disclosures

Analysts and practitioners have long sought information on order backlog (OB) as indicators of future sales, and in turn, of future earnings and stock returns. OB disclosures, though mandatory for annual reports, are voluntarily included in some quarterly reports and are sometimes presented only in textual narration. Given that the required annual OB data may be partially preempted by voluntary quarterly disclosures, we test whether quarterly OB disclosures are used by market participants, especially the qualitative OB disclosures, which were not tested before. We show that OB growth is helpful in forecasting future sales and thus assign a positive tone to qualitative OB disclosures that indicate OB growth. Both quarterly quantitative OB increases and positive qualitative tone are associated with immediate and drift returns, after controlling for other disclosures during the quarterly earnings announcements and variables that affect voluntary disclosure. Our results indicate that regulators may need to consider requiring OB disclosures in quarterly intervals when OB is sufficiently material.

Cape union mart: digital transformation and customer experience during a crisis

Learning outcomes The learning outcomes of this paper are as follows: to define the scope of digital customer experience, why it is important and how it can be used to create a competitive advantage, to evaluate the various challenges for traditional retail businesses that undertake a digital transformation strategy, to critically assess a chosen digital transformation strategy, to identify the key features of a successful digital transformation strategy and to develop a crisis communication strategy. Case overview/synopsis The Cape Union Mart Group is a typical apparel retail company faced with the challenge of improving the digital customer experience and accelerating digital transformation in the wake of the Covid-19 pandemic. Due to the pandemic, the demand for e-commerce increased dramatically. However, strict lockdown regulations forbade the delivery of clothing. When the lockdown was lifted, there was an order backlog of four weeks. To add to this challenge, the Group was in the midst of a technology update. They moved their entire information technology (IT) backbone to three clouds and, just a week before the lockdown, launched five new websites for its five different retail chains. The ultimate goal with the technology update was to give the company a competitive advantage by improving the customer experience. However, having to do this at an accelerated pace due to the pandemic posed a number of challenges. The case provides a vivid description of how the crisis unfolded and how Grant De Waal-Dubla, the executive of e-commerce and IT at the Group and his team responded to the challenges, together with the marketing team. Based on the success of e-commerce during the lockdown, the owners of the business then tasked Grant with new, aggressive growth targets. Whilst dealing with the aftermath of the lockdown, Grant’s main challenge is to develop a strategy to reach those targets. Complexity academic level The primary target audience for this case are postgraduate students enrolled on programmes such as Master of Business Administration or specialist masters in a business field such as marketing or strategy and also for Executive Education courses. Supplementary materials Teaching notes are available for educators only. Subject code CSS 11: Strategy.

Does order backlog matter for financial reporting quality? Evidence from revenue restatements

In this study, we investigate the relationship between revenue recognition restatements and order backlog. Order backlog, a leading indicator of future earnings, is defined as the monetary value of unfilled orders at year-end. The presence of an order backlog can be economically significant and can have positive or negative implications. However, it is not clear whether there is an association between order backlog and financial reporting quality and, if there is, whether the relationship is negative or positive. Our results suggest that revenue recognition restatements are more likely to occur when order backlogs or changes in order backlogs are significant. Additionally, firms just meeting an earnings target when they have greater order backlog changes, and firms with a higher deferred-revenue-to-order-backlog ratio, are more likely to restate revenue. Finally, audit firms with more experience auditing companies with average backlogs above the median mitigate the association between backlogs and revenue restatements. Hence, financial statement users and auditors should use more skepticism in reviewing financial statements when firms have order backlogs.

Exploiting Virtual Elasticity of Manufacturing Systems to Respect OTD—Part 2: Post-Optimality Conditions for the Cases of Ergodic and Non-Ergodic Order Rate with Deterministic Product-Mix

Respecting the on-time delivery (OTD) for manufacturing orders is mandatory. However, for non-JIT Batch & Queue Push-manufacturing systems, the compliance of OTD is not intrinsically guaranteed. As an OTD related manufacturing theory is largely missing it is crucial to understand and formalize the necessary conditions of OTD compliance for complex production environments for maximum exploitation of the production capacity. This paper evaluates the conditions of post-optimality while being OTD compliant for production systems, which are characterized by stochastic order rate and a deterministic product-mix. Instead of applying discrete event simulation to explore the real case-by-case order scheduling optimization for OTD compliance, a Cartesian approach is followed. This enables to define theoretically the solution space of order backlog for OTD, which contributes to developing further manufacturing theory. At the base stands the recently defined new concept of virtual manufacturing elasticity by reducing lead-time to increase virtually production capacity. The result has led to defining additional two corollaries to the OTD theorem, which sets up basic OTD theory. Apart from defining the post-optimal requirements to guarantee for orders at least a weak solution for OTD compliance, this paper reveals that for a deterministic product-mix a non-ergodic order arrival rate can be rescheduled into an ergodic order input rate to the shopfloor if the virtual elasticity T is large enough, hence the importance of having fast and flexible production lines.

Strengths and Weaknesses of the Excess Earnings Method for Valuing Backlog

For make-to-order manufacturing firms, a valuable intangibles asset is represented by the backlog, namely a company's sales orders waiting to be filled. Not infrequently, the value of this asset can constitute a significant part of the value of the company. Valuation experts may be called on to value the order backlog in case of the sale of both one or more contracts and of firms or business units. A strongly accredited method both in doctrine and in practice for valuing customer-related assets, such as backlog, is the Excess Earnings Method (EEM). However, theoretical contributions on the use of the EEM in the specific estimate of backlog are quite rare. This paper examines the topic of backlog valuation performed using EEM. After describing the valuation process, a critical analysis of the EEM when applied to such valuation object is carried out, with the aim of grasping its strengths and weaknesses. We conclude that backlog valuation performed using EEM while on the one hand is characterized by strong economic rationality and enjoys general acceptance in the context of professional business valuation services, on the other it highlights significant elements of uncertainty due to the multiple estimates needed. Moreover, it is an extremely complex and time-consuming process, whose application requires a high level of specialist knowledge and skills on the part of the valuation expert. Keywords: backlog, valuation of backlog, excess earnings method, customer-related assets. DOI: 10.7176/RJFA/11-22-12 Publication date: December 31 st 2020

Performance Analysis of Hybrid MTS/MTO Systems with Stochastic Demand and Production

We present a comprehensive numerical approach with reasonably light complexity in terms of implementation and computation for assessing the performance of hybrid make-to-stock (MTS)/make-to-order (MTO) systems. In such hybrid systems, semi-finished products are produced up front and stored in a decoupling inventory. When an order arrives, the products are completed and possibly customised. We study this system in a stochastic setting: demand and production are modelled by random processes. In particular, our model includes two coupled Markovian queues: one queue represents the decoupling inventory and the other the order backlog. These queues are coupled as order processing can only occur when both queues are non-empty. We rely on matrix analytic techniques to study the performance of the MTO/MTS system under non-restrictive stochastic assumptions. In particular, we allow for arrival correlation and non-exponential setup and MTS and MTO processing times, while the hybrid MTS/MTO system is managed by an (s,S)-type threshold policy that governs switching from MTO to MTS and back. By some numerical examples, we assess the impact of inventory control, irregular order arrivals, setup and order processing times on inventory levels and lead times.

Simulating long-term performance of regional distribution centers in archipelagic logistics systems

Indonesia has reevaluated its archipelagic logistics system to implement a strategic shift from a point-to-point network to a hub-and-spoke network, with a plan to establish seven new regional distribution centers (RDCs). To supplement the previous qualitative assessment of the plan and to potentially justify continuing with its implementation, this paper aims to evaluate the prospective long-term performance of the planned RDCs within a hub-and-spoke (HS) network. The chosen methodology for this analysis is a hybrid of optimization and simulation, using an agent-based modeling and simulation platform that incorporates a geographic information system (GIS) element to provide a realistic geographical context. This constitutes a relatively novel innovation in logistics research. Experiments were developed to estimate the logistics performance of the hub-and-spoke network and planned RDCs, as well as to identify potential problems such as bottlenecks at the RDCs and the relative (in)efficiency of the selected multimodal transport. Transport costs, inventory costs, and the order backlog of RDCs are evaluated based on the average results from 100 replications. Outcomes from the model are validated against empirical data on Indonesia’s logistics costs from the World Bank. Model results indicate that the hub-and-spoke network performs better than the point-to-point network when it comes to transportation costs. Since this is found to be the dominant element of total logistics costs, appropriate modal choice and route optimization are, therefore, critical to reducing logistics costs. The planned RDCs are found to have significant imbalance in their loadings, which is likely to produce bottlenecks. The paper concludes that a planned move to a hub-and spoke system is appropriate and that the planned investment in the RDCs is therefore justified. However, there is a need to streamline the predicted loadings at the RDCs to avoid bottlenecks. Our results suggest that the government should reopen the case and reevaluate the locations and coverage of each RDC. More generically, it is concluded that the application of hybrid optimization and simulation using agent-based modeling and simulation is feasible and the methodological approach adopted herein is generalizable to other archipelagic logistics systems.

Orders Backlog in Earnings Conference Calls

Firm disclosure of order backlog (OB) is considered important to assess future sales and profits. The extant literature on OB has generally documented positive associations between increases in OB and market returns. These associations were based on annual disclosures of backlog in 10-K filings, and could have been caused by other simultaneous disclosures that were also correlated with order backlog. To focus on the direct effects of backlog on market participants, we use references to OB in earnings conference call transcripts. We find incremental market reactions to OB after controlling for earnings surprise and other information communicated during the conference call. Our findings also reveal that OB disclosures are more relevant when they are supported by numbers and when firms derive a material amount of their demand from OB.

Sales order backlog and corporate cash holdings

PurposeWe examine the impact of sales order backlog (an important leading performance indicator) on corporate cash holdings and the role of corporate governance in the relation between sales order backlog and cash holdings.Design/methodology/approachWe use the regression analysis to examine our research questions.FindingsConsistent with the agency motive and the precautionary motive of cash holdings, we document a significant negative relation between order backlog and cash, suggesting that firms with higher order backlog hold less cash. We further examine and find that the relationship between order backlog and cash becomes stronger for firms with stronger corporate governance, highlighting the role of governance in determining the level of corporate cash holdings.Originality/valueOur study contributes to the accounting literature on sales order backlog and the finance literature on corporate cash holdings. In particular, our study contributes to developing a more comprehensive understanding of the sales order backlog because it is still an under-researched area in accounting. To the best of our knowledge, this study is perhaps the first empirical study that examines the direct link between order backlog and cash.