Abstract: The rag industry has its special demand characteristics different from other sectors.Based on the economic lot in traditional order mode,the coordinative order mode,a two echelon supply chain is proposed,in which the supplier makes up the increased cost of inventory of the seller by reducing the whole price.And the cost optimization model is developed based on the reasonable inventory cost and required demand of the seller.The flexible response of the supply chain is affected when the demand is increased,so the entire supply chain earns more profit.Finally,a case is analyzed,which demonstrates that when compared with traditional supply chain,the coordination order mode can reduce the supply chain cost and leads to a win-win relationship between supplier and seller.