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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.

A discount ordering strategy in two-level supply chain: A case study of textile industry