Inventories

Inventories are stated at the lower of cost or market value. In the United States, we manufacture certain finished products and parts inventories for drill bits, completion products, bulk materials and other tools that are recorded using the last-in, first-out method, which totaled $109 million as of September 30, 2016 and $138 million as of December 31, 2015. If the average cost method had been used, total inventories would have been $19 million higher than reported as of September 30, 2016 and $18 million higher as of December 31, 2015. The cost of the remaining inventory was recorded using the average cost method. Inventories consisted of the following:



Millions of dollars	September 30, 2016		December 31, 2015
Finished products and parts	$	1,528	$	1,992
Raw materials and supplies	836		879
Work in process	111		122
Total	$	2,475	$	2,993

As a result of the continued downturn in the oil and gas industry and its corresponding impact on our business outlook, we recorded inventory write-downs as the cost of some of our inventory exceeded its market value, particularly in the first nine months of 2016. See Note 3 for further information about impairments and other charges.

Finished products and parts are reported net of obsolescence reserves of $240 million as of September 30, 2016 and $251 million as of December 31, 2015.