Yale SOM Team Wins International Operations Competition

A team of first-year Yale MBA students won the 2007 Operations Simulation Competition this month, beating out 62 other teams of MBA students from business schools around the world. The Yale team, called “yalewillwin,” was comprised of Gene Lee, Krishan Soni, Garan Geist, and Robert Doherty.

The competition ran — entirely online — from April 9 through 11. Each team was responsible for running a simulated factory that manufactured digital satellite system receivers, using the Littlefield Technologies factory simulation. The manufacturing process had four steps carried out at three different work stations. Students controlled factors such as lot size, inventory reorder point, and the number of machines working at each station. The Littlefield Technologies simulation was designed to teach basic concepts of operations, such as capacity planning, scheduling, and inventory management. The winning team was the one that finished 250 simulated days of operation with the most money.

The Yale team earned $1,506,261 over the course of the simulation, compared to $1,457,789 for the second-place team and $7,470 if one ran the simulation without making any changes to its original parameters.

The competition was hosted by the MIT Sloan Operations Management Club. As part of their MBA classes, the competing teams had already played a more basic version of the Littlefield simulation. At Yale, it took place in the Operations Engine course, a part of the new Yale SOM core curriculum. “Operations Engine was my favorite course, and we applied a number of the things we learned in the course to the competition,” said Gene Lee ’08. “The contest was a fun thing to do on the side, but what we learned in Operations Engine is also very practical and relevant to my post-MBA career.”

Operations Engine was taught by Art Swersey, professor of operations research, who encouraged the students to enter the contest. “I’m delighted that our team won and especially pleased that they were able to apply the quantitative tools they learned in our program.”

The Littlefield factory simulation was developed and is marketed by Responsive Learning Technologies. Sam Wood of Responsive Learning Technologies said, “I designed the problem for the MIT competition to be much more challenging than the assignments typically used in courses.”

The prize for winning the contest is $500.

With 64 virtual factories chugging along for 250 simulated days, manufacturing imaginary electronic components, why did “yalewillwin” come out ahead?

According to team members Krishan Soni and Gene Lee, a lot of their advantage came from work they did before the competition started by building a number of models to predict how their factory would run.

The competitors weren’t told how demand would change over the course of the simulation, so the Yale team built a demand model. Once the first data became available, Lee said, “We ran a regression off the first 30 days, to see the demand for the first 200 days, and the demand for the last 50 days was downward sloping, so we ran another regression on that.” Soni adds, “Gene was awesome. He built a model at the very beginning, and it just predicted what the rest of the data would be for the rest of the simulation. He was just spot on.”

The students also made use of mathematical queuing models, so that they could predict what would happen if they ordered different numbers of machines for each station. “We put our expected demand into our model and we experimented with different settings, like adding more machines or changing some of the lot sizes, seeing what led to the shortest lead time.” A short lead time allowed them to get the most profitable contract level, but buying additional machines cost money and incurred debt. “There’s a tradeoff, and we had to find the optimum point,” said Lee.

The competition’s final act was another critical moment of anticipation. “For our last order, we ran a model that we learned in Operations Engine class to figure out how to order not too much and not too little, so we weren’t sitting on excess inventory.”

Another key to the Yale team’s success was their constant attention to the running of their factory. Soni said, “A lot of the credit goes to Gene and Garan, I think they lived on the Littlefield website for three days straight.” Soni admits the team checked in on their factory while in class. Lee explained why making regular adjustments was so important: “We had to take on debt to buy the initial inventory and the initial machines, so any time we got revenue, we paid off the debt as soon as the cash was available, because the interest accumulated on a daily basis. That’s one small example.”

Another of the team members, Robert Doherty, emphasizes the importance of the trust that the students had in each other. “There was enough confidence in the competence of the group members that everyone was empowered with the ability to make important decisions without discussing every detail with the group (primarily in regards to inventory orders and machinery purchases). In a scenario where every 20 minutes constitutes a virtual day, making extremely quick decisions becomes vitally important.

Soni pointed out that the competition was more like real-life operations than most classroom exercises. “Once the factory went live, you had to analyze the data in real time come up with all your decisions, and move. And the longer that takes, the worse you would do in the competition…. That was real fun: To say, ‘I’m comfortable enough with the operations techniques that I can start to think about a business problem and take decisive action pretty quickly.’”

Lee gave a share of credit for the team’s success to operations professors Lode Li and Art Swersey. “They prepared us well for the competition.”

While the team’s models helped their factory earn over 1.5 million virtual dollars, they haven’t helped them figure out how to spend their real prize money. Lee said, “We haven’t really thought about what we’re going to do with it. We might buy some t-shirts.”