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This question was already asked, but I want to know is there some issue if I use following solution to limit the backorder qty:
I'll set "Qty for Item's Status to Become Out of Stock" as negative number on Inventory tab of product edit page and re-assign this negative number via catalog_product_prepare_save observer. Thanks.

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Crazy timing - I had this problem today too!

I had opted for a similar solution when I found your question. I did some more digging to see what the root cause of this issue is:

  • Magento 1.7 CE/1.12 EE introduced this change.

  • app/code/core/Mage/Adminhtml/controllers/Catalog/ProductController.php contains a function _filterStockData that sets negative values of min_qty to 0:

protected function _filterStockData(&$stockData)
{
  if (is_null($stockData)) {
      return;
  }
  if (!isset($stockData['use_config_manage_stock'])) {
      $stockData['use_config_manage_stock'] = 0;
  }
  if (isset($stockData['qty']) && (float)$stockData['qty'] > self::MAX_QTY_VALUE) {
      $stockData['qty'] = self::MAX_QTY_VALUE;
  }
  if (isset($stockData['min_qty']) && (int)$stockData['min_qty'] < 0) {
      $stockData['min_qty'] = 0;
  }
  if (!isset($stockData['is_decimal_divided']) || $stockData['is_qty_decimal'] == 0) {
      $stockData['is_decimal_divided'] = 0;
  }
}
  • The line in the 1.7.0.0 release notes for this is Fixed: "Qty for Item's Status to Become Out of Stock" option works incorrect.

  • There is a similar function in the code for updating stock via the REST API.

  • There is a thread on the defunct magento boards about this, a poster mentions a bug report that was accepted to be fixed. I can't find any bug report. This still exists in 1.9 CE and 1.14 EE.

  • This behaviour exists in magento2.

I decided to override the Mage_Adminhtml_Catalog_ProductController controller to create a _filterStockData function without the replacement of min_qty.

I wrote an extension to handle this and have put it up on Github here: https://github.com/etailer/etailer_backorders

I've not run in to any issues with negative values of min_qty yet.

Update: Allowing negative min_qty doesn't limit the number of backorders that can be added to cart or sold. It also doesn't move products to out_of_stock when qty = min_qty.

However I've added both these features to my extension so you can refer to that if you're after implementation ideas!

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