Abstract:  The retailer's inventory policy in a supply chain environment under two'level-trade-credit and price-discount is addressed. It is assumed that the retailer has the power to make decision in the whole supply chain. In other words, the retailer can obtain the trade credit and corresponding price-discount offered by the supplier, while the retailer just offers the trade credit to its customers. An economic order quality (EOQ) model is developed to maximize the retailer's profit. Based on the model, the retailer's optimal inventory policy is determined. Moreover, a simple but efficient algorithm is presented such that it is applicable to practical applications. Finally, a numerical example is given to validate the results obtained and show the application of the proposed method.

Key words: economic order quality, twolevelstradecredit, pricediscount