It is important for enterprises' inventory management to find out the optimal production cycle and the length of shortage time,so that the total cost of inventory system can be reduced and the service level can be raised.Based on the classical EPQ model,this paper develops an EPQ model for deterioration items with different lost sale factor relative to the inventory level during shortage period.The existence of unique optimal solution is discussed by mathematic analysis and a numeric example.The sensitivity analysis shows that the parameter of losing sale has different impact on the costs of inventory system.The factors must be considered for the production inventory system to make management decision.