Abstract: The issue that how overconfidence for market demand of member in a supply chain system consisting one supplier and one retailer influences its inventory strategy and supplier's quality investment is examined. And the equilibriums are analyzed in three different inventory strategy, namely, retailer managed inventory, vendor managed inventory, and centralized decision making.Further,the impact of overconfidence for inventory strategy and profit of members in supply chain are discussed through comparing with result under perfect rationality. The results show that decision-maker of overconfidence is positively affected by psychological expectations for market demand in retailer management inventory mode, but is opposite in vendor management inventory and centralized decision making mode.

Key words: overconfidence, quality control, inventory strategy, supply chain