Inventories and major vendors

9 Months Ended

Jul. 31, 2016

Note 5 - Inventories and major vendors

Inventories are stated at the lower of cost or market, with cost determined using the weighted average cost of accounting. Cost includes materials, labor, and manufacturing overhead related to the purchase and production of inventories. We regularly review inventory quantities on hand, future purchase commitments with our suppliers, and the estimated utility of our inventory. If our review indicates a reduction in utility below carrying value due to damage, physical deterioration, obsolescence, changes in price levels, or other causes, we reduce our inventory to a new cost basis through a charge to cost of sales in the period in which it occurs. The determination of market value and the estimated volume of demand used in the lower of cost or market analysis require significant judgment.

In June 2015, the Company acquired Rel-Tech, a company that valued its inventories using specific identification (last purchase price) on a FIFO basis. As of July 31, 2016, Rel-Tech values its inventories cost using the weighted average cost of accounting. Inventories consist of the following (in thousands):

	July 31, 2016		October 31, 2015

Raw materials and supplies	$	3,037	$	2,671
Work in process		358		270
Finished goods		3,097		3,987

Totals	$	6,492	$	6,928

Purchases of inventory from two major vendors during the nine months ended July 31, 2016 represented 10%, and 7% of total inventory purchases compared to 11% and 6% of total inventory purchases for the same period in 2015. The Company has arrangements with these vendors to purchase product based on purchase orders periodically issued by the Company.