Five Star Tools

Topics: Theory of Constraints, Constraint, Contribution margin Pages: 3 (757 words) Published: December 16, 2012
Five Star Tools

Five Star Tools is a small family-owned firm that manufactures diamond-coated cutting tools(chisels and saws) used by jewelers. Production involves three major processes. First, steel “blanks” (tools without the diamond coating) are cut to size. Second, the blanks are sent to a chemical bath that prepares the tools for the coating process. In the third major process, the blanks are coated with diamond chips in a proprietary process that simultaneously coats and sharpens the blade of each tool. Following the coating process, each tool is inspected and defects are repaired or scrapped.*

In the past two years, the company has experienced significant growth and growing pains. The company is at capacity in the coating and sharpening process, which requires highly skilled workers and expensive equipment. Because of the bottleneck created by this operation, the company has missed deadlines on orders from several important customers.*

Through this report we seek to provide an analysis and an evaluation of constraints in the production process for the Model C210 and the Model D400 of the Five Star Tools product line. The significant growth the company has experienced in recent years has led to a strain on the firm’s production capacity. This report will determine how to loosen constraints on production and identify the most profitable product line given current production limitations. Incremental analysis is used to determine both the benefit of one additional hour of production time in the coating and sharpening process and the incremental yearly profit associated with adding a new inspection station.

Let us begin with the steps that can be taken to loosen the constraint in coating and sharpening . In the Goldratt Constraint Theory, he takes us through a five step process of dealing with constraints. There are many that could be named, but we’ll just focus on a few. Five Star Tools has identified the problems, now it’s time to put the...
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