Firm I in Flagstaff, Arizona produces frozen pizzas for many supermarkets in the Southwest. Firm H in California supplies all the organic wheat flour that Firm I uses in its production. Firm H sells wheat flour at $1.50 per pound and it provides shipping at a fixed rate of $300 per shipment. The shipping time is about 8 hours from California to Flagstaff, Arizona, which is less than a day hence practically negligible. If Firm I uses 120,000 lbs of organic wheat flour every year. The carrying