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This multi-period model is an example of dynamic modeling. "Dynamic" means that decisions made in this period affect not only this period's returns (or costs), but future decisions and returns as well. For this reason, multi-period problems cannot be treated as if they were merely a collection of single-period problems.

In many multi-period modeling problems, liquid or cash-like assets are treated like other commodities, so holding cash is just like keeping inventory. The following illustrates the major features of multi-period models in a financial context.

Objective of Optimization:
The objective is to minimize the client's initial investment, while covering his cash flow needs over the next five years. In other words, this is to know the minimum amount of cash that should be allocated among all the available bonds, which will maintain the required cash inflow over the next five years.