Most pattern mining methods output a very large number of frequent patterns and isolating a small but relevant subset is a challenging problem of current interest in frequent pattern mining. In this paper we consider discovery of a small set of relevant frequent episodes from data sequences. We make use of the Minimum Description Length principle to formulate the problem of selecting a subset of episodes. Using an interesting class of serial episodes with inter-event constraints and a novel encoding scheme for data using such episodes, we present algorithms for discovering small set of episodes that achieve good data compression. Using an example of the data streams obtained from distributed sensors in a composable coupled conveyor system, we show that our method is very effective in unearthing highly relevant episodes and that our scheme also achieves good data compression.