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Dr. Michael Watson
Northwestern University


Supply Chain by Design

Dr. Michael Watson, one of the industry’s foremost experts on supply chain network design and advanced analytics, is a columnist and subject matter expert (SME) for Supply Chain Digest.

Dr. Watson, of Northwestern University, was the lead author of the just released book Supply Chain Network Design, co-authored with Sara Lewis, Peter Cacioppi, and Jay Jayaraman, all of IBM. (See Supply Chain Network Design – the Book.)

In addition to teaching at Northwestern, Watson is a founding partner at Opex Analytics. 

October 10, 2017

Simple Game for Teaching the Value of Optimization


A Guest Post by Sara Hoormann (Lewis) of Opex Analytics

LLamasoft and Opex Analytics jointly developed a game to teach people about the value of analytics.  You might find this exercise helpful to run at your organization.




Watson Says...

Giving people a working understanding often builds a confidence that aides in implementation and also fuels their appetite to continue down the path of becoming an analytics powerhouse.

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We at Opex Analytics find ourselves spending considerable time convincing clients of the value of data science and optimization solutions.  Some of this is for good reason, right? I certainly wouldn’t advise clients to simply take the word of the innumerable consulting and software vendors out there pitching you their first class solutions.   On the other hand, however, there is a danger in being too closed off to what you may view as black box solutions simply because the underlying methods or techniques are not well understood within your organization.  Companies not focused on innovation quickly become stuck with clunky and expensive processes eating away at their bottom lines.

 

During the continued rise of analytics solutions, it is important that you not only implement cool new solutions, but also play the role of an ‘educator’ in order to ensure executives and users in your or your clients’ organizations understand the true value and power of the techniques being used.  The goal is not to confuse your audience with all the intricate details of code, but to arm stakeholders with the knowledge required to explain the solution and ‘sell’ the value being created. Giving people a working understanding often builds a confidence that aides in implementation and also fuels their appetite to continue down the path of becoming an analytics powerhouse.  However, being an educator means you are the one responsible for figuring out the best way to teach others.  Developing an interesting and effective means to do this is not easy. 


Think about the application of Prescriptive Analytics solutions for instance.  How do you go about convincing stakeholders of the value generated when applying Mathematical Optimization within problem solving? How many times have you had to defend optimization in comparison to strategic and operational decisions being made on ‘gut feel’, or even worse, explain why you can’t generate an optimal answer quickly using an excel spreadsheet? 

We know that many companies have heard the term ‘optimization’ but misunderstand what optimization really is or the exact reason it is so valuable.  It is because of this issue that we worked with LLamasoft to jointly develop the Slick Oil Distribution Game.  The game’s purpose is to provide a fun and effective way to help others discover the value of optimization on their own.

The game begins with the introduction of an Oil Company (Slick) that has landed a big new customer and must now determine the optimal way to source them given their existing network. 

 

Players are provided with a web based version of the network to interact with (shown above). 

Upon first glance, the network looks small enough that it should be a cinch to solve with an ‘eyeball’ approach or perhaps a few quick notes on paper.  The players are first led through the use of ‘Greedy’ approaches. They are asked to select the least cost well or refinery in isolation and then build out the sourcing strategy from there.  It quickly becomes apparent that this fails to find ‘the best’ sourcing structure.  They are then led to consider a slightly more sophisticated approach considering pairs of sourcing options. Despite determining the least cost well/refinery combination as the start to their solution, they are again left to realize the result is still not optimal.  Players are then encouraged to continue play until they discover the key lesson within the game.  Typically some (but not all) will discover that the optimal approach finds the solution which takes advantage of the overall network capacity requiring the players to bypass the use of the lowest cost Well/Refinery combination (Well 1/Refinery B) so that their capacity can be exploited into two other low cost combinations resulting in an overall cheaper solution. 

 

These ‘aha’ pieces buried within optimal solutions is the basis for the true value generated by mathematical optimization.  Another good example of this lesson can be found in an SC Digest Article on ‘Determining Whether to use a Simple Solution or Linear Program for Complicated Problems’ written by Opex Partner Mike Watson.

 

Players are often stumped by the optimal solution to the Slick Oil Distribution Game. Even when they do find the optimal solution, however, we ask that they consider a Slick problem of greater magnitude. What if we increased the number of wells and refineries just ten fold? Could you still ‘eyeball’ or reason out the best way to source this new customer? Because of the general nature of optimization, the number of combinations of potential solutions to evaluate grows exponentially when proving the absolute best answer.  The well known society for operations research and management science, INFORMS, defines optimization as  ‘Narrowing your choices to the very best when there are virtually innumerable feasible options and comparing them is difficult’. 

 

So next time you are struggling to explain why you can’t just find the answer using Excel, or management wants to bypass optimization because they think they have a ‘firm grasp’ on what is optimal based on their own general understanding of the problem, give this game a try. 

Whether you are trying to get buy-in for a major project or simply attempting to educate your new hires, it's a quick and fun way to demonstrate the true value of optimization! 

 

You can find the link for the game and a complete game guide here:  Game Guide:  How to Teach the Slick Oil Distribution Game

 

Let us know what you think!


Sara Hoormann (Lewis)

Solution Specialist


Sara is a subject matter expert in analytics and supply chain optimization. Throughout her career she has worked on many complex supply chain analytics projects for companies around the world. Sara started her career working in Industry as a Supply Chain Specialist at Dupont. She then moved on to join the Supply Chain applications company formerly known as LogicTools, which was sold to ILOG in 2007 and IBM in 2009. Sara worked hands on with clients in all areas including sales, training and consulting as well as contributed significantly to the development of applications internally.

Sara is also co-author of the book “Supply Chain Network Design,” which was published in 2012 and is being used by practitioners and a number of universities. She is a frequent guest lecturer on the topic of Network Design at several prominent U.S. Universities.

​Sara Lewis graduated from Penn State University with degrees in Business Logistics and Management Information Systems.



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