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on-hand pegging nothing

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Here is an example of the wierd pegging we have when an item has a minimum:

on-hand pegs nothing (??), safety stock and production orders peg on the PO.

What setting should we change to make the production orders peg on the on-hand until none is available and then peg on the PO with the safety stock, which would seem logical considering the dates we have for each of the requirements.

Here are the current order settings:


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