The customer is using item substitutions (plan groups) on formulas that consist of two lines, each with its own priority. The primary and secondary formula item have corresponding item coverage setup that replenish demand with planned purchase orders at warehouse 12 and transfer this demand to warehouse 13. However, when planning is run with demand at warehouse 13 the system completely ignores plan group setup. It covers the demand with on-hand inventory and replenishes the remaining quantity only for the item with priority 1, without considering the on-hand inventory for the item with priority 2. However, if the demand is for warehouse 12 (where no transfer is required), the item substitutions work as expected, and the on-hand inventory for the item with priority 2 is considered.