When you create a sales return order for an item, that item shows under Item Availability by Event it is expected to increase inventory. Most times with a sales return order, the customer is returning the order because it is damaged. There should be a flag or some type of option that indicates why the item is being returned which would then prevent a negative effect on inventory.

The problem is, when running the planning worksheet, suggestions are not being made to purchase or make more of something because that item is due to be returned on a sales return order, but if it's damaged we can't count on it. In the end, after the returned items has been dispositioned and determined it cannot be returned to inventory, posting the sales credit memo updates the inventory quantity on hand - resulting in an item journal entry, which further has a negative affect on the financials.