3.2. Assumptions
1. The inventory system involves only one item over a known and
finite planning horizon H.
2. The items deteriorate at a varying rate of deterioration θ(t),
where 0 < θ(t) ≪ 1. There is no repair or replacement of
deteriorated units during the planning horizon. The items
will be withdrawn from the warehouse immediately as they
deteriorate.
3. Shortages are allowed in all cycles and each cycle starts with
shortages.
4. The fraction of shortages backordered is a decreasing function
β(x), where x is the waiting time up to the next replenishment,