Abstract：The prospect theory is the basic theory in the field of uncertain decision making. The prospect theory can explain it under the mean prospect model. Therefore, through the improvement of mean prospect, the calculation method of reference point for different products is constructed, and the inventory decision model under the prospect theory is proposed. The relationship between the prospect theory and the newsvendor decision-making deviation is proved theoretically. Simulation results show that in different products, the decision maker’s psychological reference point and sensory loss(gain) interval are significantly different. What’s more, in part of products, the prospect theory can explain the decision maker’s actual order
behavior. This conclusion is consistent with the existent research.