The problem is one that can be found on earlier versions of R3 (CU10) and below. This should be resolved in CU11 and in D365 F &O.

• We traced the invent trans id (LotID) that is on the Temporary work history log

On the Warehouse master there is a field that indicates the Raw Material Policy. The field is labeled "Status after material put" . We need to have the status = Picked and not Physically Reserved. The flaw with the software is that this same field is used to address raw material puts for Production Orders. The problem comes when a company wishes to backflush, and does not want the raw material status = picked until after the goods have been manufactured.

On the Inventory and Warehouse management fly-out / tab in Warehouse setup, Set “Status after material put” to PICKED. It should not be RESERVED PHYSICAL.

InventLocation.WHSRawMaterialPolicy (InventLocation is the WAREHOUSE table).

Without the hotfix this will cause a conflict in organizations that are using WHS and Production Control where backflushing is desired for raw matrial consumption.

Unfortunately I do not have the Hotfix number at hand, but this should hopefully get you on your way.