This blog describes the change in behavior for the consumption of on-hand inventory in relation to other supply, during planning and explosion related to KB 2887723 - Consume on-hand inventory after consuming supply orders.
Consume on-hand inventory BEFORE all other supply
Delivery date control Capable to Promise (CTP) during sales order entry will use on-hand inventory for the first order, regardless of the delivery date. This can lead to situations where CTP is unable to fulfill the desired order date, even when on-hand inventory is available.
Consuming on-hand inventory before incoming supply ensures that the planner will always receive action messages to reduce or cancel superfluous supply orders for the period.
In this scenario, we have 1 pc. of on-hand inventory and two firmed supply orders for 1 pc. each (Supply A and Supply B).
A sales order for 2 pcs. is entered on a date after the last supply (Demand A).
On-hand inventory and Supply A will be used to fulfill the demand.
Supply B is not used for any demand, so an action message to cancel the order is created.
Now we enter another sales order with a delivery date prior to the first supply (Demand B).
As the on-hand inventory is used to fulfill the first sales order, we cannot fulfill the second order.
Consume on-hand inventory AFTER all other supply
Delivery date control Capable to Promise (CTP) during sales order entry will not use on-hand inventory until all supply orders that are due during the positive days interval are used. This ensures that CTP saves the on-hand inventory for possible subsequent sales orders.
However, in the situation where there are no additional sales orders, the on-hand inventory will remain as is - without any action message to reduce supply orders.
As in Scenario 1 we have 1 pc. of on-hand inventory, and two firmed supply orders for 1 pc. each (Supply A and Supply B).
With the changes from KB 2887723, Supply A and Supply B will be used to fulfill the demand, and the on-hand inventory will be left for possible subsequent orders.
However, now Supply B is used to fulfill the first sales order and hence you will not get an action message to cancel it.
Now we enter the second sales order with a delivery date prior to the first supply (Demand B).
As the on-hand inventory is free, we can use this to fulfill the second order.