In this study, inventory models are developed for coordinated supply chain using Stackelberg game framework. In the proposed model, customer demand is assumed to be price and time sensitive. The buyer attempts to adjust retail selling prices by charging premium or offering discount to the floor selling price depending upon the optimistic or declining market conditions. The aim of this research paper is to analyse the optimal pricing policy that maximises total profit for both the players under the principles of coordination, and competition. Some numerical examples are given to study the model. The results show that the vendor gets more advantage when the collaborative model is applied and the buyer's profit is bigger in the Stackelberg game model than the collaborative model. Copyright © 2011 Inderscience Enterprises Ltd.