Suppose that AhoySales, Inc., a large multinational shipping company, has decided to spend €10 million on a new storage space in Munich, €45 million on new aircraft, and €5 million on additional acquisition of kerosene. Further assume that in addition to these expenses the company is planning to produce 5 million parcels, which have been selling at a price of €5 each.

Now suppose that AhoySales plans to keep a tenth of that production in inventory. Over time, the company’s parcels have met with increasing demand, but the inventory has only increased by €1 million.

a. How much was AhoySales’ total planned investment?

b. How much did AhoySales actually invest?

c. What is the difference between the actual and the planned investment? Should AhoySales produce fewer or more parcels? Why?