* Corresponding author. E-mail addresses: mokhtari_iau@yahoo.com (M. Mokhtari) © 2012 Growing Science Ltd. All rights reserved. doi: 10.5267/j.msl.2012.05.028 Management Science Letters 2 (2012) ***–*** Contents lists available at GrowingScience Management Science Letters homepage: www.GrowingScience.com/msl A discount ordering strategy in two-level supply chain: A case study of texture industry Mohammd Mokhtari a* , Hassan Javanshir b , Mehdi Kamali Dolatabadi a , Faraz Maadanchi c and Laleh Tashakori d a Department of Texture industry, Science and Research, Islamic Azad University, Tehran, Iran. b Department of Industrial Engineering, South Tehran Branch, Islamic Azad University, Tehran, Iran c Department of Texture Industry, Amirkabir University, Tehran, Iran d Institute of Toba Higher Educational Studies, Tehran, Iran A R T I C L E I N F O A B S T R A C T Article history: Received March 10, 2012 Received in Revised form April, 15, 2012 Accepted 20 May 2012 Available online May 29 2012 Supplier selection, inventory management and optimal lot sizing has been one of the most important issues in many industries especially in production planning issues associated with texture industry. The proposed model of this paper first introduces an algorithm to choose the best supplier and it determines the optimal lot size using discount strategy. The proposed model of this paper considers different influencing factors such as location, quality of materials, cost, and mutual trust for supplier selection, determines their relative importance weights and then a discounting method is used to determine the ordering lot-size. The preliminary results indicate that the proposed model of this paper can be implemented in texture industry, very efficiently since the ordering discount policy is not sensitive to changes on inventory holding and setup expenditures. © 2012 Growing Science Ltd. All rights reserved. Keywords: Supply chain management Supplier selection Texture industry EOQ Discount model 1. Introduction Cost reduction has been one of the primary concerns among managers of many industries and the cost reduction in logistic is an essential importance where a significant amount of total cost of production is involved in this part (Aissaoui et al., 2007). There are many evidences to believe that selection of a good supplier can substantially reduce the cost of logistic and purchasing items (Xia & Wu, 2007). However, selecting an appropriate supplier often involves various criteria, which makes the process complicated (Liu & Hai, 2005). There are literally two source selection problems. In the first one, single resource or single supplier problem (SSP); all suppliers are capable of providing products and services with the same quality, delivery, customer satisfaction. In such circumstances, selection of supplier depends on cost of goods and services.