Note 3 – Inventories

Inventories consisted of the following:


	September 30, 2016		December 31, 2015
Finished goods	$	649,880	$	532,606
Raw materials		24,329		21,278
Work in process		9,446		10,375

	$	683,655	$	564,259

Inventories are valued at the lower of cost or market.

The Company estimates retail inventory shortage for the periods between physical inventory dates on a store-by-store basis. Inventory shrinkage estimates can be affected by changes in merchandise mix and changes in actual shortage trends. The shrinkage rate from the most recent physical inventory, in combination with historical experience, is the basis for estimating shrinkage.