Assumptions:
(1)
demand rate is constant and known over the horizon planning;
(2)
production rate is constant and known over the horizon planning;
(3)
the production rate must be greater that demand rate, i.e. P>D;
(4)
Backorders are allowed and all backorders are satisfied;
(5)
Two type backorders cost are considered: linear backorder cost (backorder cost is applied to average backorders) and fixed cost (backorder cost is applied to maximum backorder level allowed);
(6)
The model is for only one product;
(7)
The planning horizon is infinite.