Sensitivity analysis of the EOQ model with planned shortages

This paper examines the economic-order-quantity inventory models with planned shortages and analyzes the sensitivity of the total cost functions to errors in the order size and the maximum permissible shortage when the holding costs and shortage costs are not linear. It is shown that the penalty associated with a non-optimal policy depends not only on the errors in the order size and the maximum shortage permitted, but also on the shapes of the holding costs and shortage costs curves.