âWhat should we do?âJohn Reagan was not sure, but his brother and driver partner Fred Reagan was on the phone and needed adecision. Should they run in the race or not? It had been a successful season so far, but the Pocono racewas important because of the prize money and TV exposure it promised. This first year had been hardbecause the team was trying to make a name for itself. They had run a lot of small races to get this shot atthe big time. A successful outing could mean more sponsors, a chance to start making some profits for achange, and the luxury of racing only major events. But if they suffered another engine failure on nationaltelevision…Just thinking about the teamâs engine problems made John wince. They had blown the engine seven timesin twenty-four outings this season with various degrees of damage to the engine and car. No one knew forsure why. It took a lot of sponsor money to replace a $20,000 racing engine, and the wasted entry feeswere no small matter either. John and Fred had everything they owned riding on Reagan Racing. Thisseason had to be a success.Paul Edwards, the engine mechanic, was guessing the engine problem was related to ambient temperature.He argued that when it was cold the different expansion rates for the head and block were damaging thehead gasket and causing the engine failures. It was below freezing last night, which meant a cold morningfor starting the race.Tom Burns, the chief mechanic, did not agree with Paulâs âgut feeling,â and had data to support hisposition (see Exhibit 1). He pointed out that gasket failures had occurred at all temperatures, which meanttemperature was not the issue. Tom had been racing for twenty years, and believed that luck was animportant element in success. He had argued this view when he and John discussed the problem last weekâIn racing, you are pushing the limits of what is known. You cannot expect to have everything undercontrol. If you want to win, you have to take risks. Everybody in racing knows it. The drivers have theirlives on the line, I have a career that hangs on every race, and you have got every dime tied up in thebusiness. Thatâs the thrill, beating the odds and winning.â Last night over dinner he had added to thisargument forcefully with what he called Burnsâ First Law of Racing: âNobody ever won a race sitting inthe pits.âJohn, Fred and Tom had discussed Reagan Racingâs situation the previous evening. This first season was asuccess from a racing standpoint with the teamâs car finishing in the top five in 12 of the 15 races itcompleted. As a result the sponsorship offers that were critical to the teamâs business success werestarting to come in. A big break had come two weeks ago after the Dunham race, where the team scoredits fourth first-place finish. Goodstone Tire had finally decided Reagan Racing deserved its sponsorship atPocono, the last major race of the season — worth a much-needed $40,000. Furthermore, Goodstone wasconsidering a full season contract for next year if the teamâs car finished in the top five in this race. TheGoodstone sponsorship was for a million a year, plus incentives. John and Fred received a favorableresponse from Goodstoneâs Racing Program Director last week when they presented their plans for nextseason, but it was clear that his support depended on the visibility they generated in this race.âJohn, we only have another hour to decide,â Fred said over the phone. âIf we withdraw now wecan get back half the $15,000 entry and try to recoup some of our losses next season. We will loseGoodstone, theyâll want $25,000 of their money back, and we end up the season $50,000 in the hole. Ifwe run and finish in the top five, we have Goodstone in our pocket and can easily add another car nextseason. You know as well as I do, however, that if we run and lose another engine, weâre back at squareone next season. We will lose the tire sponsorship and a blown engine is going to lose us the oil contract.No oil company wants a national TV audience to see a smoking car dragged off the track with its nameplastered all over it. The oil sponsorship is $500,000 that we cannot live without. Think about it — callPaul and Tom if you want — but I need a decision in an hour.âJohn hung up the phone and looked out the window at the cold, fall sky. It looked like the temperature forrace time would be as forecasted, 40 degrees.EXHIBIT 1:Note from Tom BurnsJohn:I got the data on the gasket failures from Paul. We have run 24 racs this season, with temperatures at racetime ranging from 53 degrees to 82 degrees. Paul had a good idea in suggesting we look into this, but asyou can see, this is not our problem. I looked at the seven races with gasket failure, and tested the data fora correlation between temperature and gasket failures and found no relationship.Relationship Between Temperature and Gasket Failures2# Breaks in Head GasketDuring Each RaceAmbient Air Temperature (Degrees F)In comparison with some of the other teams, we have done extremely well this season. We have finished62.5% of the races, and when we finished, we were in the top five 80% of the time. Our rate of blownengines is 29%, but we are running fast, so we have to expect some difficulties. I am not happy with theengine problems, but I will take the four first-place finishes and 50% rate of finishing in the money 3 overseven blown engines any day. If we continue to run like this, we will have our pick of sponsors.-TomEach point is for a single race. A gasket can have multiple breaks, any of which may produce an engine failure.3Thc top five finishers in a race are âin the money.â2âGet Paul Edwards for me.â John was calling to get his engine mechanicâs opinion on whether theyshould run. The data Tom put together indicated that temperature was not the problem, but John wanted toget Paulâs direct assessment.Paul Edwards was a classic âgas station mechanic.â His fingernails were permanently blackened bygrease and his coveralls never stayed clean for more than two minutes on Saturday mornings. He had beenknocking around the professional circuit for ten years after dropping out of school at sixteen to followdrag racing. He lacked the sophisticated engineering training that was getting more common in racing, buthe did know racing engines.John had discussed the gasket problem with Paul two days ago. As he waited for Paul to come to thephone, he reflected on their previous conversation. Paul was a man of few words, and was not given tooverstatement. âThe way I see it, the turbo-pressure during warm-up — in conjunction with the differentexpansion rates for the head and block — is doing a number on us,â was about the extent of what he had tosay on the problem. It was his personal opinion on the cause of the engine failures and he would neverrepresent it as anything else.It was the same story John had heard twenty times, but it did not match Tomâs data. âPaul we havechewed this over before. How do you know this is the problem? When we ran at Riverside thetemperature was 75 degrees and we still lost the gasket and the engine.ââI am not sure what happened at Riverside,â Paul had replied. âI am not sure that temperature is theproblem, but it is the only thing I can figure out. It is definitely the gaskets that are blowing out andcausing the engine to go.âPart of Reagan Racingâs success was due to a unique turbo-charging system that Tom and John haddeveloped. They had come up with a new head design that allowed them to get more turbo pressure to theengine while maintaining fuel consumption at a fairly constant level. By casting the head and turbo bodiesin a high-strength aircraft alloy, they had also saved almost fifty pounds of weight. The alloy they wereusing was not as temperature sensitive as the material in the engine block, but the head gasket should beable to handle the different expansion rates.John could hear the sounds of race day in the background as Paul approached the phone. âHello John,â hesaid, obviously excited. âThe Goodstone coveralls just got here. We are talking some fine threads, and nosew-on patches from these guys. The logo on the back and our names are stitched right into the material. Iguess this means we get to keep âem. Course, I got some grease on mine already, so they probably wonâtwant âem back anyway.ââIâm glad you like them,â John said. âI need some information from you. What are we doing about thegasket failure business?ââThe car is set to go. We have been using a different sealing procedure since Slippery Rock, and had noproblems for two races. Tom says the Goodstone deal is set as long as we finish in the money today. Theguys in the shop want this bad. Goodstone is a class act. They can make us the number one team on thecircuit if they decide to take us on.âJohn had only ten minutes to make up his mind when he called Tom. There was one last thing he wantedto know. âGive me the temperatures for the races where we did not have any gasket problems.ââWhat do you need them for?ââJust call it idle curiosity. Do you have them?ââHold on.â Tom was organized, which counted for a lot at a time like this. âOkay, here we are. I am goingto give you the number of races at each temperature. Letâs see: One race at 66 degrees; three races at 67;one each at 68 and 69 degrees; two at 70; one each at 72 and 75; two at 76; one each 79, 80 and 82. That82 was Tampa; what a scorcher that day turned out to beâ And I do not have the last two races on my list.They were 78 and 73 degrees at race time.âJohn plotted the points as Tom read them off (see below). It was time to call Fred.Ambient Temperature for Races without Blown GasketsNumber ofRacesAmbient Air Temperature (Degrees F)Reagan Racing Background: The Risks of RacingA RISKY PROFESSION… By Ed Hinton, Tribune Auto Racing Writer. February 14, 2001(Edited by Dr. Goitein)Mario Andretti awakens a split-second before dying. âI still wake up from dreams that I am crashing, orthat Iâm upside down,â he says, âthings I used to dread and fear.âHe is now 60. âThank God I survived that era,â he says. In his time, he did it all:dirt-track stock cars, sprint cars, midget cars, lndy cars, prototype sports cars, NASCAR, Formula One.He won it all: the lndy 500, the Daytona 500, the world driving championshipâ¦And he lived to tell about it. He cannot count the friends who didnât. âAt the beginning of a season, Iwould look around at a drivers meeting and I would think, âI wonder whoâs not going to be here at theend,ââ he says. âThere were years when we lost as many as six guys.Questions: Estimates and adviceThe car was designed and tested at âroom temperatureâ conditions.Based on the track record of races at less than âroom temperature, â i.e., 65 degrees or less, what do youestimate the chances for the car to have a gasket failure during a less than room temperature race? ____%Based on the track record of races at âroom temperature,â i.e., 66-77 degrees. what do you estimate thechances for the car to have a gasket failure during a room temperature race? ____%Based on the track record of warm temperature races i.e., over 77 degrees, what do you estimate thechances for the car to have gasket failure during an above room temperature race? ____%All things considered, what do you estimate the chances for the car to have a gasket failure at the PoconoRace?____%What do you estimate the chances will be for being âin the moneyâ at the Pocono Race?____%Based on the case material, if John was a good manager, making a good decision, what should Johndo? Why?
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