$7-2$ FIVE STAR TOOLS $[$L$0$ A$1]$

$($Note: This case relates to the appendix on the Theory of Constraints.$)$

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.

Maxfield Turner, the son of Frederick Turner, founder of Five Star Tools, is the president of the company. Over

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