A new algorithm for combinatorial search optimization is developed. This algorithm is based on orthogonal arrays as planning schemes and search graph techniques as representation schemes. Based on the algorithm, a discrete formulation is given to model two search domains. As an application, the algorithm is used to deal with the problem of least cost tolerance allocation with optimum process selection. Studies are performed to compare between different orthogonal array and column assignment and number of design levels with respect to optimum. The proposed algorithm is capable of dealing with continuous, discrete linear and nonlinear functions and is validated by test cases versus other local and global search methods.