Performance Evaluation FAQs

Click on a link below to access that FAQ (frequently-asked question) topic.


Customer Satisfaction
Historical Benchmarks
Historical Benchmarking Results Not Accessible
Initial Disadvantage Based on Round-3 Results
Inventory Turnover
Performance Ranking
Products in All Channels/Regions
Ratios Rather Than Absolutes
Return-on-Assets
Stock Prices
Stock Prices Down Industry-Wide




Customer Satisfaction

“What drives customer satisfaction for set-top boxes?”

Customer satisfaction is mostly driven by service level. Unfilled orders are another (presumably less important) driver of customer satisfaction. Please view the following video for more details.


revised 10/14/2017
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listed under "Definitions"
listed under "Performance Evaluation"
listed under "Research Studies"
listed under "Service"





Grades Calculation

"How is the grade of each firm calculated in LINKS?"

Clicking on the link to the right accesses a short document about the LINKS grade calculation: How Is The LINKS Within-Simulation Grade Calculated?

revised 05/10/2014
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listed under "Performance Evaluation"
listed under "Teaching With LINKS"



Grades Reporting To Students

“Is it possible to report the LINKS grades to the students, as part of their page one financial/operating report? This would be the full performance evaluation report, as is available in the latter pages of the instructor’s Game Administrator Report.”

Yes, by setting switch_grades=Y, LINKS grades are reported as part of the first page of the financial/operating reports. Like all LINKS switches, the LINKS Administrator sets this switch based on instruction/direction from the LINKS instructor.

The default switch_grades=N means that grades are only reported to instructors as part of the Game Administrator Report. Grades reporting to students can lead to over-attention to grades rather than running their LINKS business, which is the reason why the default setting is switch_grades=N. However, sometimes, activating grades reporting is the only way to catch the attention of students as to their relative within-industry standing, particularly for younger students (i.e., undergraduates). And, sometimes students will be quite demanding about wanting to know their current and on-going within-LINKS grade standing, thus leading the LINKS instructor to activating full grades reporting to students.

Grades reporting should not be activated until at least several rounds have passed after initialization and advancement to round #3, to reduce initial information overload as students assume managerial control of their LINKS firms and also to ensure that there are meaningful differences in performance. Activating grades reporting as part of the round #6 game run is the earliest recommended activation timing.

revised 12/13/2008
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listed under "Performance Evaluation"
listed under "Teaching With LINKS"





Historical Benchmarks

“What are the Historical Benchmarks?”

How high is “up”? In LINKS, the answer is partly provided by the within-industry benchmarks reported on the first page of each firm’s financial reports. These within-industry benchmarks provide a firm’s current-industry performance “ups” (current-industry minimums, averages, and maximums) on Key Performance Indicators such as Net Income To Revenue % and Forecasting Accuracy %.

However, the larger question remains: what’s possible? … what’s the upper limit of performance? The LINKS Historical Benchmarks provide the answer to this broader question.

LINKS Historical Benchmarks are based on the history of all firms since February 1, 2012 for a particular LINKS Simulations variant.

These Historical Benchmarks provide a meaningful cross-industry performance reference for any firm at any point in time in a LINKS event. For example, a firm in a LINKS Supply Chain Management Simulation industry in Month #6 may compare its performance to all past firms in Month #6 of LINKS Supply Chain Management Simulation industries via the Historical Benchmarks.

Note: The Global Top-10 Rankings also provide benchmarks, but the comparison in the Global Top-10 Rankings is to all other firms in all LINKS Simulations variants with a scheduled game run in that calendar week. And, of course, those other firms are using any LINKS Simulations variant (not necessarily your LINKS Simulations variant) and are at various stages in their LINKS events.

revised 06/14/2013
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listed under "Financial and Operating Reports"
listed under "LINKS Simulation Database"
listed under "Performance Evaluation"





Historical Benchmarking Results Not Accessible

“I am having problems finding the link for Historical Benchmarking. Where is the link?”

Historical Benchmarking results are available when enough historical data for a LINKS Simulations variant are available for meaningful comparisons. Sufficient historical data for your particular round-count for your LINKS Simulations variant aren't available.

LINKS firms always have access to your own within-industry Forecasting Accuracy results for each round on page 1 of your financial results (your firm's Word doc file). A graphical report for the last six rounds is included in your KPI (Key Performance Indicator) charts in your Excel results.

revised 05/27/2013
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listed under "Financial and Operating Reports"
listed under "LINKS Simulation Database"
listed under "Performance Evaluation"





Initial Disadvantage Based on Round-3 Results

“Our firm is behind other firms as we assume managerial control after round #3. For example, in our five-firm industry, our market share is only 19.4% which seems way below the expected average of 20.0% market share. Aren’t we disadvantaged compared to the other firms in our LINKS industry?”

No, you aren’t disadvantaged.

The differences among LINKS firms after initialization and advancement to round #3 are very minor. Such differences are due to statistical "noise" in the generation of sales volumes in rounds #2 and #3. Statistical "noise" is a fact of life with which everyone in all businesses must cope. And, LINKS firms with slightly below-normal sales volume in round #3 no doubt benefit from slightly above-normal sales volumes at other times during LINKS events. Everyone faces equal chances of positive or negative statistical “noise” at all times.

The LINKS performance evaluation system is not activated until round #4. Thus, LINKS firms are only evaluated during the time when they are actively managing their LINKS firms.

Finally, many rounds of performance for many performance evaluation dimensions accumulate to form the final performance evaluation assessment in LINKS events. Thus, all LINKS firms have ample opportunity to excel regardless of their slightly different starting positions after round #3.

revised 04/09/2007
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Inventory Turnover

“Can you help me understand the inventory turnover calculation a little better?”

Inventory turnover is based on average ending inventory for this round and for previous round. Thus, with this averaging, a firm might have a "relatively low" inventory turnover this round even though its current ending inventory is zero ... if its ending inventory in the previous round was substantial. Note that the maximum inventory turnover ratio for a firm is 100.0, corresponding to situations with near-zero or zero average inventory levels.

revised 09/11/2013
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listed under "Definitions"
listed under "Financial and Operating Reports"
listed under "Performance Evaluation"





Performance Ranking

“How do we determine our exact ranking in LINKS?”

Exact performance rankings for firms are not provided to LINKS participants. But, the first page of your financial results has details of your standing on the KPIs (Key Performance Indicators) relative to your competitors.

Some people like to look at stock prices to gauge their relative standing compared to competitors. Stock prices are reported in Research Study #1.

However, stock prices aren’t a formal part of the LINKS KPIs. But, presumably the same things that drive stock prices also drive financial performance. Financial performance is included among the LINKS KPIs.

revised 09/12/2013
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Products in All Channels/Regions

“Is it required to have all products actively distributed in all channels and regions?”

No, your products don't have to be actively distributed in all channels and regions. It's your decision completely on how your products are deployed in the available channels and regions. You wouldn't normally distribute a product in a channel/region that didn't provide positive profits, unless there were other compelling side benefits from doing so.

Note that the standard financial statements do not provide channel-specific profitability breakdowns. You'd have to create such channel-specific breakdowns, if you think that's a useful thing to do. The bottom line is clear: manage your business to maximize your long-run profitability.

revised 09/12/2013
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listed under "Generate Demand"
listed under "Performance Evaluation"
listed under "Strategy"





Ratios Rather Than Absolutes

“Why are ratios used in the performance evaluation metrics rather than absolutes? For example, why isn't (absolute) net income a performance metric?”

Ratios are used in the performance metrics so that firm size is not a factor. Within the performance metrics, everything is expressed in ratio terms or relative-to-"something" terms (like relative to revenues) so that large or small firms aren't obviously advantaged or disadvantaged in the performance metrics.

revised 05/16/2000
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listed under "Financial and Operating Reports"
listed under "Performance Evaluation"





Return-on-Assets

“What's the definition of 'Return-on-Assets' as used in the Performance Evaluation Reports?”

Return-on-Assets is defined in the LINKS participant's manual. In calculating Return-on-Assets, use last quarter's Total Assets (from last quarter's Balance Sheet) and this quarter's Net Income (from this quarter's Corporate P&L Statement) and then annualize the calculated Return-on-Assets figure.

For example, if last quarter's Total Assets was $120,000,000 and this quarter's Net Profits is $6,000,000, then this quarter's ROI is 6,000,000/120,000,000 which equals 5% for this quarter. Then, you'd need to multiply this by 4 to translate it into annualized ROI (20%, in this example).

revised 02/20/2007
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listed under "Definitions"
listed under "Financial and Operating Reports"
listed under "Performance Evaluation"





Stock Prices

“How are stock prices determined?”

Stock prices presumably reflect investors’ expectations of a firm’s future financial performance. Investors’ expectations presumably are based on a firm’s current and recent-past financial performance along with other factors like operational efficiency. In addition, industry-wide financial performance might also influence a firm’s stock price, since industry-wide performance reflects long-run financial potential for all firms in an industry. There’s also likely to be a degree of randomness in the formation of investors’ expectations.

revised 03/29/2004
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listed under "Definitions"
listed under "Performance Evaluation"





Stock Prices Down Industry-Wide

“Stock prices are down for all firms in the industry. Granted, the majority of firms are currently losing money. But, stock prices are down even for firms that are currently profitable. What’s happening?”

Reductions in net income (and losses) obviously reduce long-run expectations of performance and, therefore, stock prices. And, average industry performance presumably does influence future expectations of industry-wide performance for all firms in an industry, even those with positive net income at the moment.

revised 01/02/2007
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listed under "Financial and Operating Reports"
listed under "Performance Evaluation"




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