Case Competition
Sloan Team Takes First at Carnegie Mellon's 8th Annual Operations Case Competition
By Monica Nakamine
December 11, 2003
After consistently ranking among the top three schools for the past four years, this year’s team from Sloan ranked first again (in 2000, MIT tied with Wharton) in Carnegie Mellon University’s (CMU) 8th Annual Operations Case Competition that took place in November 2003. Ronak Shah, LFM ’05, (pictured below at far right) was among the four Sloan students who represented MIT. Shah’s teammates were (below, from left to right) Bruce Constantine, MBA ’05; Caroline Seaman, MBA ’04; and Erin Sellman, MBA ’04. The team received $2,000 and a trophy.
Each year, the competition consists of about 15-20 teams from various universities across the country, a panel of judges primarily from industry and CMU faculty, and a real-life operations-related problem. Each group is given seven hours – from 7 p.m. to 2 a.m. – to review the case, figure out a strategy to solve the situation, and come up with a presentation to give that morning to the judges.
Shah explained the dilemma that the teams were presented with:
“This year’s case involved automotive recycling in the Netherlands,” said Shah. “The European Union has legislation in place requiring that 85 percent of the weight of an old car must be recycled. [Each EU country must achieve this standard by this year.] By 2015, it has to be at 95 percent. The thing about the Netherlands, they hit 85 percent in 1997 -- six years ahead of time. Now, they’re trying to hit the 95 percent target by 2007 since they want to maintain their reputation as a leader in environmental issues. But, in the last six years, they have had no improvement toward that 95-percent goal.”
Shah added that, overall, Auto Recycling Nederlands (ARN), the governmental body that administers the country’s automotive recycling program, has created an inefficient supply chain through the use of plentiful and untargeted incentives. ARN charges 50 euros per new car registration, yet it costs 100 euros to recycle 85 percent of an old car.
The solution?
“We used system dynamics to explain how we wanted the agents in the case to operate,” said Erin Sellman, Shah’s teammate. “We focused on recycling, where other schools focused on different parts of the value chain.”
According to both Shah and Sellman, their unique angle to the situation was one of the reasons they came out ahead.
“Our solution involved targeting incentives to the supply chain at the recyclers themselves,” said Shah, “and being more intelligent about which parts of the car to recycle.”
Currently, the ARN pays off old-car dismantlers, car parts transporters, as well as the recyclers. The Sloan team found this highly inefficient, especially considering that, for example, there are around 260 dismantlers in a country that has a population of 16.2 million people – too fragmented for such a small country.
“Instead of paying the dismantlers, transporters, and recyclers, we chose to pay only the recyclers who would buy disassembled car parts from the most efficient dismantlers,” said Shah. “This would create economies of scale, and ensure that only efficient companies survive.”
The team’s approach was a success, but there were other details that they focused on, which set them apart from the other teams.
“We had a solid analysis, but it was our presentation, poise, and professionalism that helped us win,” said Shah.
Even before the competition, the team practiced with other case studies, which saved time in terms of developing a presentation strategy when it came down to the real competition. Going in, they were familiar with the process, and, equally as important, they already knew how to best work together as a team.
Aside from MIT, universities that participated in this year’s competition include: Cornell, Purdue, Columbia, Carnegie Mellon, University of Virginia, University of Texas at Austin, University of Pennsylvania, University of Wisconsin, Indiana, Vanderbilt, Yale, Northwestern, Michigan State, William & Mary, Arizona State, and Duke.