Inventories

The components of inventories consist of the following (in thousands):



	December 31, 2014		June 30, 2015
Purchased parts and materials	$	2,273	$	3,303
Finished goods	9,069		5,898
Total inventory	$	11,342	$	9,201

Inventories are comprised of finished goods and purchased parts and assemblies, which include costs to purchase assembled units and overhead, and are valued at the lower of cost (first-in, first-out method) or market value. The valuation of inventory requires us to estimate excess or obsolete inventory. The determination of excess or obsolete inventory requires us to estimate the future demand for our products. Our customers may require us to purchase and stock material amounts of inventory to ensure availability to meet forecasts, which increases our risk of excess quantities. Because our markets are volatile and are subject to technological risks, price changes and inventory reduction programs by our customers, and because we are required to make last-time buys of certain components on occasion, there is a risk that we will forecast incorrectly and produce excess inventories of particular products or have commitments to purchase excess inventory components from our suppliers. As a result, actual demand will differ from forecasts, and such a difference has in the past and may in the future have a material adverse effect on our gross margin and our results of operations. Any write downs to inventory due to the existence of excess quantities, physical obsolescence, changes in pricing, damage, or other causes result in a new cost basis for the inventory. When we sell or dispose of this inventory, the new cost basis is charged to cost of sales. The decrease in inventory from December 31, 2014 to June 30, 2015 is due to lower required levels of inventory for a significant customer maintained at a vendor managed inventory location.