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Here is the information from the help:

Configuration of Inventory Tracking in Projects

If you have enabled the Inventory and Order Management and Inventory features on the Enable/Disable Features (CS100000) form and are using the related functionality, you can use the enhanced integration of projects with inventory by enabling the Project-Specific Inventory feature.

Once you have enabled the feature, you configure the applicable projects to use the needed inventory tracking mode. For each project, you select one of the following modes in the Inventory Tracking box on the Summary tab of the Projects (PM301000) form:

• Track by Project Quantity and Cost: To track the quantity and project-specific cost of the stock items reserved for the project.
• Track by Project Quantity: To track the project-specific quantity of the purchased items that are reserved for the project. In this mode, the system tracks the item cost by general cost calculation rules (that is, the cost is not project-specific). One cost layer holds the item costs recorded for the same inventory item with the same project budget key but received to different locations of the same warehouse.
• Track by Location: To track the quantity and cost of the purchased materials at the warehouse location level. For more information about using this mode, see Project Inventory Tracking by Warehouse Location: General Information.

In an existing project, you can change the inventory tracking mode only if no items have been received for the project yet.

If you need to disable the Project-Specific Inventory feature in a production system, you can do this after the following preparatory actions:

1. Cleaning up the inventory. To do this, you need to manually create and release inventory transfer transactions that move the items reserved for projects to free stock (that is, to the non-project code) or to projects linked to warehouse locations (that is, projects that have the Track by Location inventory tracking mode).
2. Assigning all existing projects the Track by Location inventory tracking mode and linking them to particular warehouse locations.

Once the feature is disabled, the system will continue tracking inventory for projects using the only Track by Location mode.

Inventory Tracking in Projects

For a project in which the Track by Project Quantity or Track by Project Quantity and Cost inventory tracking mode is selected in the Inventory Tracking box of the Projects (PM301000) form, you create and process documents with stock items as follows:

• To purchase stock items for the project, you create a purchase order on the Purchase Orders (PO301000) form, selecting the project and project task for each item. The expenses are captured to the project cost budget as a project commitment.
• To receive items in a warehouse, you process a purchase receipt on the Purchase Receipts (PO302000) form. To separate the project items from free stock, the system automatically creates a virtual project-specific location within the warehouse location where the materials are received. The purchased materials are reserved for the project and cannot be issued for another project.
• To issue the materials for the customer, you process an inventory issue for the project on the Issues (IN302000) form. The quantity available for issuing is defined by the warehouse location, the project, and the project task.

Tracking Item Costs

In a project with the Track by Location or Track by Project Quantity mode selected in the Inventory Tracking box of the Projects (PM301000) form, the cost of the issued materials is not project-specific and is defined by general cost calculation rules. The cost of an item depends on the item valuation method and is affected by other factors: the warehouse location from which the item is issued, the account and subaccount, the selected subitem, and the lot or serial number of the item. For more information on how the system calculates item costs, see Item Costs and Valuation Methods: General Information.

In a project with the Track by Project Quantity and Cost mode selected, the system tracks project-specific cost layers. That is, for each combination of project and project task, the system calculates the cost of each item depending on the item valuation method and other applicable factors: the warehouse location from which the item is issued, the account and subaccount, the selected subitem, and the lot or serial number of the item.