The　effect　of　overconfidence　and　demand　uncertainty　in　inventory　system　is　studied.　In　order　to　depict　the　decision-maker＇s　overconfidence,　a　mean-increasing　and　variance-decreasing　transformation　is　introduced.　The　monotonicities　of　the　optimal　order　quantity　and　optimal　profit　on　penalty　cost　and　the　overconfident　level　are　obtained.　It　is　proved　that　the　larger　demand　leads　to　the　high　optimal　order　quantity,　and　the　optimal　order　quantity　has　stochastic　monotonicity　under　the　cut　criterion　order.　The　corresponding　sufficient　conditions　and/or　necessary　and　sufficient　conditions　are　given.　Furthermore,　by　using　standardized　random　variable　transformation,　it　is　proved　that　profit　will　decrease　when　the　demand　variability　increases　in　the　high　profit　condition.