Evaluating the effect of sub-optimality

Comparison of a sub-optimal solution with an optimal, possibly time-consuming to find, solution has crucial importance in Operations Management. In this note, we highlight the potential underestimation of the effect of sub-optimality in recent studies and propose to use an alternative measure for comparing the quality of optimal solutions with sub-optimal ones. We give examples from the realm of Inventory Pooling and the “Price of Anarchy” in supply chains.