You can have an overflow when doing mathematic opetations between integers and chars, this can affect the expected result since that value is going to be assigned to a char... here you have

invr[len1++] = str[i]-32;

but you should cast to char like:

invr[len1++] = (char)(str[i]-32);

There are a couple issues with your code:

1. BufferedReader.read() returns -1 if you've reached the end of the stream. You're not handling this.
2. You are already reading the text line into line so when you call input.read() it reads the first char of the next line! You could either use line.charAt(0) or just use input.read().

This might fix your problem:

   // While there are characters to consume.
    for(int ch; (ch = input.read()) != -1;)
    {
        // Create an operator and operand stack                         
        operatorStack opStack = new operatorStack();
        opStack.push(';');
        operandStack intStack = new operandStack();

        token = (char)ch; // Get the token

        if(token == '\r' || token == '\n')  // handling line ends.
             continue;

        if(Character.isDigit(token))
        {
            System.out.print(token);
            intStack.push(token);
        }
        else if(token == ')')
        {........

int is bigger than char, but the result of your operation is typed int (which you're then storing in a char). So the compiler is warning you you might lose information storing an int value into a char variable.

Instead, ensure the result is a char, which is a bit of a pain because + and - with char values results in an int, so we have to cast:

char ch = (char)(encrypted_message.charAt(i) + key[index]);
if (ch > 122)
    ch = (char)(ch - 26);

To answer your question, you are basically Down-casting the int data type to short in both the cases which is not acceptable in Java. To describe in detail, below are the detailed description:-

Case 1:-

public class Demo 
{
    public static void main(String[] args) 
    {
       int a=10,b=20;
       short c = (a<b)?a:b;
       System.out.println(c);
    }
}

In this scenario, you are just down-casting data type from int to short which is throwing

error: incompatible types: possible lossy conversion from int to short

Case 2:-

public class Demo 
{
    public static void main(String[] args) 
    {
        final int a=10,b=20;
        short c = (a<b)?a:b;
        System.out.println(c);
    }
}

In this scenario, since you have declared your variables viz. a & b as final. As a result, both the values becomes CONSTANT for variable c. It means for the variable c, the values of a & b won't get changed & it has been finalized to 20 which is in range of short data type (-32,768 to 32,767). Therefore, you won't get any error unless & until you keep the value within the range.

Real Test case:-

public class Demo 
{
    public static void main(String[] args) 
    {
        final int a=32768,b=32788;
        short c = (a<b)?a:b;
        System.out.println(c);
    }
}

Compile this class & see the magic! You'll again get the same error.

For your further understanding, please refer here to get a clear picture in general.

Moral of the story:- Just do not downcast your data type!!