To establish Minimum and Maximum Stock levels you'll need to Navigate to the Product record and click on the Inventory tab.

Using the System Configuration screen, Minimum and Maximum levels can be set to automatically calculate using a multiple of the Average Monthly Usage value.

In the first screen shot above, the Average Monthly Usage in the Downtown Warehouse is 103.33 units. If we set the "Auto-set Maximum Stock" preference to 2 then the Max stock level for Downtown would automatically be set to 206.66, representing a 2 month supply at typical usage. The Minimum stock level would be set to 103.33, representing a 1 month supply at typical usage.

The highlighted Time Period preference indicates how many months of history to use in calculating the average usage. This number represents the most recent complete months. The Min, Max and Average statistics are recalculated each night.  For more on these Inventory Statistics, please review this article.