Question
Paula Beane owns a restaurant franchise part of a Southern Homestyle restaurant chain. One of the chains popular breakfast items is biscuits and gravy. Central
Paula Beane owns a restaurant franchise part of a Southern Homestyle restaurant chain. One of the chains popular breakfast items is biscuits and gravy. Central Warehouse makes and freezes the biscuit dough, which it then sells to the franchise stores, where it is thawed and baked in the individual stores by the cook. Each franchise also has a purchasing agent who orders the biscuits (and other items) based on expected demand. In March 2015, one of the freezers in Central Warehouse broke down, and biscuit production was reduced by 25% for three days. Paulas franchise runs out of biscuits during those three days, but demand does not slow down. Paulas franchise cook, Betty Baker, sends one of the kitchen helpers to the local grocery store to buy refrigerated ready-to-bake biscuits. Although the customers are kept happy, the refrigerated biscuits cost Paulas franchise three times the cost of the Central Warehouse frozen biscuits, and the franchise loses money on this item for those three days. Paula is angry with the purchasing agent for not ordering enough biscuits to avoid running out of stock and Betty spending too much money on the replacement biscuits. Who is responsible for the cost of the biscuits? At what level is the expense controllable? Do you agree that Paula should be angry with the purchasing agent? With Betty? Why or why not?
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