This paper extends the work of Karwan et al. for the finite production model by studying the effect of intracycle, within cycle, backorders on the economic manufactured quantity and the total inventory system cost. This phenomenon is studied under two cases: (1) full transmission of learning, and (2) partial transmission of learning. The optimum operating inventory doctrine is obtained by trading off procurement cost (i.e. the sum of set-up, material and labour costs) per unit time, the inventory carrying cost per unit per unit time, as well as the backorder cost per unit per unit time, so that their sum will be a minimum. Examples illustrating the calculation procedure are provided.
