(1) Regular products must be maintained in the bailment warehouse in an amount above the minimum level and below the maximum level.

(2) The minimum bailment level is a historical three-week case demand. The historical three-week case demand is calculated by taking the products past 12-months sales and dividing by 12 to obtain a monthly demand. This figure is divided by four to obtain a weekly demand and then multiplied by three to obtain a three-week demand.

(3) The maximum level is a historical twelve-week case demand. The historical twelve-week case demand is calculated by taking the products past 12 months sales and dividing by 12 to obtain a monthly demand. This figure is divided by four to obtain a weekly demand and then multiplied by 12 to obtain a twelve-week demand. The maximum level may be exceeded from time to time if a vendor demonstrates that a larger amount is needed to obtain an economical shipment and the department agrees.

(4) Vendors will be charged a bailment fee equivalent to one dollar per case based on a historical three-week case demand for each day a regular product is out of stock. A bailment fee will not be charged if the unavailability of supply is due to an incident beyond the vendor's control or it is based on department error.

(5) Vendors will also be charged the costs incurred by the department when there is insufficient product to fill orders during sales periods.

(6) Fees and charges will be offset against department payments for products.