This paper outlines the development and use of a web based virtual factory simulator for teaching industrial statistics and process improvement techniques. Students can manage the factory for either a period of one month, or the length specified by lecturers, with the factory running in real time. The main objective is to reduce quality problems and continuously improve the quality over a substantial period of time. Techniques such as control charts, process capability, experimental design and response surface methodology and their underlying statistics are explored. This immersive simulation creates a problem-based learning approach with relevant academic underpinning. It provides the student with the experience of applying theory to the practice of operating a factory in real-time. Students are able to “live” with the problem and research and develop solutions over a significant time period.