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Supply Chains, Investment Portfolios, and Roster Management

Supply Chains, Investment Portfolios, and Roster Management. Joel Sokol, PhD Joel.Sokol@isye.gatech.edu. OPERATIONS RESEARCH. Key Questions. How valuable will each player be? Variability/forecast error Short and long term Roster composition – who’s on the team? Now and future

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Supply Chains, Investment Portfolios, and Roster Management

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  1. Supply Chains, Investment Portfolios, and Roster Management Joel Sokol, PhD Joel.Sokol@isye.gatech.edu

  2. OPERATIONS RESEARCH Key Questions • How valuable will each player be? • Variability/forecast error • Short and long term • Roster composition – who’s on the team? • Now and future • Player development – who’s on their way? • Coordination through entire system

  3. What is operations research? • Mathematical modeling and solution/analysis techniques for: • Understanding complex systems • Accounting for stochastic/random outcomes • Optimizing system performance • …or performance of a particular system participant

  4. Investment portfolio optimization • Maximize $ return • Diversification • By economic sector, size • By risk profile • By value in various economic conditions • Budget restrictions • Determine the right risk level for each investor • OR used by every major investment firm, hedge fund, mutual fund, etc. – $Billions

  5. Maximize $ return Diversification By economic sector, size By risk profile By value in various economic conditions Budget restrictions Determine the right risk level for each investor Maximize team success Diversification By position and skill set By risk profile By value in reg. season and in playoffs Budget restrictions Determine the right risk level for each team The roster as a portfolio of players

  6. Supply chain coordination • Acquisition of raw materials • Progression through refining, manufacturing, packaging, etc. • Periodic quality checks (rework or discards) • Can purchase spare assets from competitors • Key: Goods/services ready right when needed • OR used by almost all major manufacturers/ service providers (Ex: GM saves $2B)

  7. Acquisition of raw materials Progression through refining, manufacturing, packaging, etc. Periodic quality checks (rework or discards) Can purchase spare assets from competitors Key: Goods/services ready right when needed Draft/acquire “raw” players Progression through stages of minor league system Periodic quality checks (repeat league or release) Can acquire assets (trade, free agency) from competitors Key: New players ready right when needed Player development as a supply chain

  8. Can operations research help? • Successful mathematical models/methods • Selecting maximum-value portfolios • Accounting for risk and variability • Coordination across multi-stage systems • Planning today for future needs/circumstances • Important differences (research required) • Variability in raw talent • More competition for scarce assets • Higher value of winning

  9. What will a combined model do? • Is a trade/free agent signing worthwhile given a team’s risk profile and season/playoff needs? • Which players will likely be “surplus”? • Get value for them now • Where/when will shortages likely occur? • Remedy before need becomes acute • How could drafts/trades/signings/contracts/promotion be structured to minimize or avoid exposure to shortage? • Etc.

  10. Where we are so far? (GT-centric) • Current research progress • Combined portfolio/supply chain framework model for roster management • Investigation of value profiles • Identified some categories of players who lose more value in playoff situations than others do • Biggest needs • Full data (esp. defense), interactions, projections • Team specifications (horizon, need to win, get to playoff vs. win playoffs, mgr. preferences, etc.)

  11. Opportunity for collaboration • Benefits for operations research partners • Development of new mathematical models and methodology • Enjoyable work for baseball fans! • Benefits for MLB partners • Early-adopter competitive advantage • Customized planning models

  12. Supply Chains, Investment Portfolios, and Roster Management Joel Sokol, PhD Joel.Sokol@isye.gatech.edu

  13. Operations research at Georgia Tech • Industrial and Systems Engineering (#1-ranked) • Supply Chain Logistics Institute (SCL) • Quantitative and Computational Finance (QCF) • Algorithms, Combinatorics, & Optimization (ACO) • Engineering Statistics (STAT) • Stochastics, Simulation, Human-Computer Interaction, etc. • Previous GT/OR sports-related successes • Schedules for MLB in 2005 & 2007 (SCL & ACO) • Ranking system for NCAA basketball tournament selection and seeding (SCL, ACO, QCF, STAT)

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