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5star Tools Case Study

In: Business and Management

Submitted By soulsucker
Words 849
Pages 4
BUS5431 - Managerial Accounting

Individual Case Study

7-2 FIVE STAR TOOLS
James Jiambalvo – Chapter 7 Case 2

Submitted by: K Greene

Executive Summary:
Five Star Tools is a small family-owned business that manufactures diamond-coated cutting tools (chisels and saws) used by jewelers. The production of these tools involves three major processes. The first of these processes involves steel “blanks” (tools without the diamond coating) that are cut to size. The second process involves the blanks being sent to a chemical bath that prepares the tools for the coating process. The final process is the major process in the line. 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 with that growth has come some growing pains. The company finds itself at capacity in the coating and sharpening process. This process requires highly skilled workers and expensive equipment. Because of growth a bottleneck has been created by this operational process and this in turn has cause the company to miss delivery deadlines on orders from several important customers.

Maxfield Turner, the son of Frederick Turner, founder of Five Star Tools, president of the company is having a discussion over lunch with Betty Spence, vice president of marketing over what to do the combat the growing pains the company is experiencing presently. Betty’s concern is if something is not done then the company will develop a reputation for being an unreliable supplier and this will affect business even more. She is suggesting maybe Five Star tools should turn down some of its orders if they cannot meet the deadline specified by the buyers. Failure to

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