Assignment Group 1 Speed Ventures 22032022.docx - GROUP 1...

GROUP 1
Problem statement: Should Speed Ventures race in the final race of the year?
Situations:
To Race Outcomes Gain vs loss
1 Race and win (be in top 5) Gain
2 Race and blow the engine Loss
3 Race and loss Gain
Not To Race
1 Don’t race Gain
Situation analysis 1 Speed Ventures last 24 race history
Winning 50%
Engine Blowing 29%
Loss 21%
Situation analysis 2 Temperature impact
Temperature °F No of times engine blowout
50-55 1
55-60 2
60-65 1
65-70 2
70-75 1
75-80 0
Does air
temperature have
impact on race
performance
No absolute correlation between air temperature and engine blowing based
on existing data in the case. But information on the correlation between air
temperature and completed races was missing. After obtaining this new
set of data (see exhibit 1) we see that there is no past example of
completed race below 65 degrees.
Situation analysis 3 Financial information and expected value
Option 1 Race and win (top 5) Option 2
Race and blow
the engine
Entry fee (-) 30000 Entry Fee (-) 30000
Goodstone Tire(+) 40000 Loose sponsor (-) 500000
Sponsorship (+) 1500000 Existing sponsor (+) 0
Current Debt (-) 57000 Goodstone Tire (+) 40000
Current Debt (-) 57000
Excpected value 1453000Xunknown probability Expected value
-
547000Xunknow
n probability
Option 3