Abstract: The contract with trade credit is one of the most important means to coordinate the supply chain.In a two level supply chain composed of one manufacturer and one retailer,the inventory models are described,and the joint decision of the retailer's optimal order quantity,the manufacturer's optimal lot-sizing and the optimal periodic trade credit period is proposed using heuristic algorithms.Then the profits distribution program is provided to coordinate the supply chain.Finally,the model and propositions are validated by an example.To conclude,this paper provides a theoretical basis to realize the supply chain coordination using the contract with trade credit.

Key words: order quantity, lot-sizing, periodic trade credit, supply chain coordination