Minimum stock level  stock may never fall below a given level.
 Maximum stock level  the most stock that can be kept in order to retain cost effectiveness.
 Standard order  the amount of stock that should be ordered on a regular basis.
 Order level  the point where stock must be ordered.
 Rate of stock turnover  the number of times per year that the stock must be replaced.
 The rate of stock turnover can be calculated with this formula:
Activity 
Calculate the rate of stock turnover per year.
a) 
Average stock quantity at cost price of R250 000; cost price of goods sold R625 000. 
b) 
Stock quantity at beginning of year was R140 000; stock at end of year was R95 000; cost price of stock sold was R528 750. 

