Stackelberg Inventory Model under Two Levels of Trade Credit

Usually it is assumed that the supplier would offer a fixed credit period to the retailer but the retailer in turn would not offer any credit period to its customers, which is unrealistic, because in real practice retailer might offer a credit period to its customers in order to stimulate his own demand. Moreover, much of existing EOQ models under a given delay-in-payments tactic consider to decide the optimal order quantity and cycle. This paper proposes Stackelberg game model to get the optimal delay-in-payments tactic as well as optimal ordering police subject to two levels of trade credit. Finally numerical examples are shown to illustrate the results given in the paper.