Barney Briggs Owns A Restaurant Franchise That Is Part Of

Barney Briggs owns a restaurant franchise that is part of a chain of “southern homestyle” restaurants. One of the chain’s popular breakfast items is biscuits and gravy. Central Warehouse makes and freezes the biscuit dough, which is then sold to the franchise stores; there, 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, 2012, one of the freezers in Central Warehouse breaks down and biscuit production is reduced by 25% for three days. During those three days, Barney’s franchise runs out of biscuits but demand does not slow down. Barney’s franchise cook, Janet Trible, sends one of the kitchen helpers to the local grocery store to buy refrigerated ready-tobake biscuits. Although the customers are kept happy, the refrigerated biscuits cost Barney’s franchise three times the cost of the Central Warehouse frozen biscuits, and the franchise loses money on this item for those three days. Barney is angry with the purchasing agent for not ordering enough biscuits to avoid running out of stock, and with Janet for spending too much money on the replacement biscuits.

Required

Who is responsible for the cost of the biscuits? At what level is the cost controllable? Do you agree that Barney should be angry with the purchasing agent? With Janet? Why or why not?

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