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 realtime. 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.