ISSUES IN EDUCATION

Real world data in the classroom: an anecdote

“How does this apply in the real world?” is a common refrain made by students to those of us who work in academia, and it’s a fair question. In a frantic effort to cover everything that’s in the syllabus by the end of the term, the vital link between what’s in the textbook and what actually takes place in industry is often minimized or overlooked. Somewhat by accident, I had the lucky fortune of making this link in my operations management class two years ago and the result is one of the best stories of student success that I have had in my teaching career. In brief, I gave my students a basic inventory control assignment using real demand data from a local company. One student in particular excelled at the assignment, which, after an e-mail or two, led to an internship. The student now works at the company.

StoneAge Waterblast Tools (www.stoneagetools.com) is a local, employee-owned company in Durango, Colo., that designs and builds high-pressure waterjet nozzles for industrial cleaning. StoneAge has a “worldwide distribution” with a “large inventory for quick shipments” and with “87 percent of their orders shipped with expedited delivery” according to their website.

A few years ago, I had the opportunity to tour the StoneAge facility and start a discussion with them about their inventory control policies. They had a number of inventory concerns; in particular, they felt that their inventory turnover ratio was too low and they wanted a systematic way to price their products. By their own admission, they carry large inventory and generally use expedited shipping, so to me this was an interesting, real inventory control scenario that warranted further exploration.

The company supplied me with some data and we got to work on their inventory concerns. About the same time, I was teaching a section of operations management, a core course in the School of Business Administration at Fort Lewis College. I had just given an exam, and had two hour-long classes to kill (for lack of a better term) before a weeklong break. After the break, the syllabus dictated that we were to start inventory control with the basic EOQ model, so I decided to start early and go big.

First, I briefly discussed just the basic ideas of what inventory control is about: How much to order and when? Second, with StoneAge’s permission, I showed and explained to the class information for one part of one of their products, the Banshee 18 pipe cleaner. Third, we discussed the quantity discounts available on this part from one of StoneAge’s vendors.

After the discussion, I put the class to work. Their assignment was to organize all the information as best they could and then determine when to order and how much to order in order to minimize cost. Note that the students had no formal instruction on inventory control including holding costs, setup costs, etc. – they were on their own. However, I made it clear in the assignment that I did not expect exact results; rather, I was more interested in their thought processes along the way and that the main focus of the assignment was for the students to document them.

‘Outlier’ nails the assignment

The class consisted of 25 students. Approximately half the class struggled with the assignment and didn’t get much past writing down the information. Another fourth of the class made SWAG estimates for the order quantity and timing. The remaining fourth of the class actually attempted some derivation via spreadsheet to determine the economic order quantity, the order timing and cost. I was both pleased and impressed as I graded the assignments at the end of the weeklong break, and then I graded the outlier. One student, “Will,” had nailed the assignment – estimating holding costs and set-up costs, combining everything in a professional quality spreadsheet and nearly deriving the EOQ model with quantity discounts on his own!

Will is a great student and a bit of a Renaissance man, a double major in Business Management and Art and a world-class telemark skier. After I returned the assignment to him, we discussed it and Will indicated that he had a real interest in the material. I contacted StoneAge and asked if they would be willing to offer Will an internship to help with the inventory issues that we were working on and they enthusiastically agreed. Over the next semester, Will held a paid internship at StoneAge where he earned course credit for our standard internship class, supervised by both the human resources director at StoneAge and myself. During the internship, Will developed an inventory cost calculator (which StoneAge continues to use to this day) that determines whether to take advantage of the quantity discounts available from most of their vendors. Will is now an employee at StoneAge and according to an e-mail I got from him recently, his title is “business analyst.”

This is only an anecdote and as far as I know, the other 24 students in my class did not get jobs and start great careers due to my decision to kill a couple of hours of class before a break. But I can state with certainty that at least one student now understands how this applies in the real world.

Eric Huggins (huggins_e@fortlewis.edu) is an associate professor of management at Fort Lewis College in Durango, Colo.