3. Inventories

Cigarette inventories (including leaf tobacco, manufactured stock and materials and supplies) are valued at the lower of cost, determined on a last-in, first-out (“LIFO”) basis, or market. Electronic cigarette inventories of $85 million and $41 million included in manufactured stock as of December 31, 2013 and 2012, respectively, are valued at the lower of cost, determined on a first-in, first-out (“FIFO”) basis, or market. Inventories consisted of the following:


	December 31,
	2013		2012
	(In millions)
Leaf tobacco	$	349	$	311
Manufactured stock		143		94
Materials and supplies		7		5

	$	499	$	410

If the average cost method of accounting was used for inventories valued on a LIFO basis, inventories would be greater by approximately $264 million and $245 million at December 31, 2013 and 2012, respectively.