The　effect　of　risk　aversion　and　demand　uncertainty　in　inventory　system　is　studied.　The　monotonicities　of　the　optimal　order　quantity　and　optimal　profit　on　penalty　cost　and　risk　level　are　obtained.　By　using　stochastic　comparison,　larger　demand　leads　to　high　optimal　order　quantity,　and　larger　demand　leads　to　higher　optimal　profit　when　the　penalty　cost　is　set　to　zero.　It　is　proved　that　the　profit　will　decrease　when　the　demand　variability　increases,　and　the　corresponding　sufficient　conditions　and/or　necessary　and　sufficient　conditions　are　given.　Furthermore,　a　class　of　distributions　exist　such　that　larger　demand　variability　leads　to　higher　optimal　profit.　Several　examples　are　provided　to　illustrate　the　obtained　results.