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PurposeThe aim of this paper is to respond to calls for in‐depth studies of production and operations management (OM) teaching by providing an analysis of the relative effectiveness of a continuous problem‐based assessment and a traditional final exam assessment in OM.Design/methodology/approachAn undergraduate OM module is used to assess how well a problem‐based assessment method performs against a more traditional final exam in terms of impact on student learning, student classification and feasibility. Quantitative data on student performance, feedback and satisfaction are used.FindingsThe analysis shows that the problem‐based assessment provides a better learning experience for the students, but is a worse classificatory of student results than the conventional exam. In terms of feasibility, problem‐based assessment can be a cost‐effective assessment method.Research limitations/implicationsThis study analyses the assessment method used on one module for nine years; to increase the generalizability of the findings further research is needed with different modules and contexts.Practical implicationsThis paper gives guidance to OM educators on how to improve assessment methods to achieve both improved learning effects as well as an accurate classification of student performance.Originality/valueThis study extends the literature on problem‐based learning to assessments and provides an empirical analysis of one such method. This study also provides detailed analysis of different assessment methods in OM based on longitudinal data.