Regal Marine is one of the United States' leading luxury performance boat manufacturers. Sales of all models in a recent year topped $100 million, with their biggest customer, Boat Tree, buying close to 90% of all boats produced by Regal Marine. Headquartered in Orlando Florida Regal Marine currently makes 22 different models, ranging from a 14 foot runabout sport boat to the 40 foot Commodore yacht. The product life cycle for each of Regal Marine's boats is 3 to 5 years depending on the size of the boat with smaller boats having shorter life cycles. These short life cycles result in continuing stream of new products that work their way through the company's value chain. Cross functional design teams with representatives from R&D, production, purchasing, accounting, marketing customer service, upholstery, and cabinetry work together to fine tune prototype designs. Customer feedback is gathered at boat shows and suppliers regularly present their new product innovations to the company for potential use in future boat models. To streamline manufacturing each team attempts to use existing components and production processes when feasible. Computer aided design systems are used for all designs. When the design of a new model is finished Regal Marine makes a prototype of it before producing the new models. To make a new boat model a foam based carving called a plug is created. CAD system specifications are used to drive the automated carving of plugs. The plug becomes the basis for making the molds for fiberglass hulls and decks. The finished molds are then used to make thousands of fiberglass hulls and decks. Regal Marine has several hundred molds representing their largest capital investment. Molds are kept even after production of outdated models is stopped. At the Orlando factory production begins with coating the molds with gelcoat and then spraying the dried gelcoat with chopped fiberglass and resin. Then the fiberglass hulls and decks are popped off the molds and wheeled into assembly stations that move in synch each day. While hulls and decks are being crested other manufacturing departments such as upholstery, cabinetry, electrical, and small part fabrication prepare the components that will be installed in each boat during assembly. Trained workers install required components, fasteners, electrical parts, upholstered seats, and cabinets for example according to a strict schedule that assures that each assembly station's work is done each day so the lines keep moving. It takes anywhere from 2 to 20 days to complete production depending on the boat size. In the smaller boat category for example 10 boats a day roll off the assembly line. As soon as boats are quality checked and approved for delivery they are loaded onto trucks for delivery to customers such as Boat Tree. No boats are kept in finished goods inventory.

Question 2 Classify each of the items A-H into one of the business functions of the value chain

A Cost of a toll free telephone line used for customer inquiries about product specifications, performance, and warranty coverage B Cost of sales and promotional materials for use at boat shows C Labor costs of workers at this Cabinetry Department of the production facility D Cost of an industry research report on boat industry trends E Equipment and trucks purchased for transporting finished boats to retail outlets such as Boat Tree F Boat hull and deck mold fabrication costs G Cost of a new CAD design station used by the Design Department H Costs of upholstered seats for Commodore yachts