In this thesis we consider the trade credit coordination mechanism in a two-echelon supply chain system with one single-vendor and one single-buyer. The vendor adopts the EPQ model to supply buyer, and the buyer makes its order decision based on the EOQ model. We develop a cost model to study the benefit of coordinating the supply chain system through the use of trade credit mechanism to create mutual benefits. There are two parts in the thesis: First, we extend the model proposed by Luo and Zhang to an EPQ-based inventory model; we investigate the effect of trade credit coordination mechanism for the resulting model, and derive the optimal trade credit period and the optimal order quantity. Second, we further extend the EPQ-based inventory model to allow split-delivery. We also investigate the effect of trade credit coordination mechanism for the resulting model, and derive the optimal trade credit period and the optimal order quantity. An illustrative example is given to show the effectiveness of the model.