Inventory Balancing 
The aim of inventory balancing is to balance excess and shortage at individual locations. An excess occurs if the projected demand is greater than the safety stock at a certain point in time. A shortage occurs if the projected demand is less than the safety stock at a certain point in time.
Inventory balancing is an optional process in Service Parts Planning (SPP) that is executed as a planning service in the Planning Service Manager. You can schedule the inventory balancing service periodically. The following triggers also lead to inventory balancing:
Reduction of storage space at a location
Increased demand within the limited freeze horizon
Note
If you do not want to carry out inventory balancing for a product or location product, you can specify this in the location product master data on the SPP Inv. Balancing/Surplus tab page or in the product master data on the Properties of SPP tab page.
The system can decide to balance stock within an inventory balancing area only. An inventory balancing area is part of a bill of distribution (BOD) and consists of locations that can balance stock with one another. One location can thus belong to several inventory balancing areas. However, within an inventory balancing area, parent locations cannot release stock to their direct or indirect child locations. Inventory balancing from a child location to a parent location is possible.
The inventory balancing service calculates excess and shortage of a product for all locations in the BOD in the existing areas, and corrects the stock imbalance. However, inventory balancing only occurs if the benefits of a stock transfer are greater than the costs. In this way, the inventory balancing service ensures that existing stock is evenly distributed.
Note
If you use form-fit-function classes in your product interchangeability work, inventory balancing takes account of this in planning. You can find further information under Form-Fit-Function Classes and Inventory Balancing for the Products of an FFF Subset.
Prerequisites
You have created inventory balancing areas. For more information, see Creation of Inventory Balancing Areas.
You have defined packaging specifications for rounding in the SAP Easy Access menu under
Advanced Planning and Optimization 
Service Parts Planning (SPP) Environment Packaging Specification Maintain Packaging Specification 
. For more information, see Making Settings for Rounding.You have executed the following IMG activities in Customizing for Advanced Planning and Optimization under
Supply Chain Planning Service Parts Planning (SPP) Inventory Balancing :Make General Settings for Inventory Balancing
Define Service Profile for Inventory Balancing
Define Warehouse Space Savings Storage Type
For more information, see the Implementation Guide (IMG).
You have defined a planning profile that contains inventory balancing in Customizing for SCM Basis under
Planning Service Manager Define Planning Profile .For more information, see Use of the Planning Service Manager in SPP and PSM Services for Inventory Balancing.
Process
The system calculates excess and shortage of a product at all locations within a BOD and the inventory balancing areas.
The system balances excess and shortage within one area. For more information, see Balancing Excess and Shortage. The system rounds the potential stock transfer quantities. For more information, see Rounding and Rounding in Inventory Balancing. The system executes a cost-benefit analysis for each potential stock transfer. If the calculated benefit is greater than the cost, the system creates the recommended stock transport requisitions.
The system sorts the recommended stock transport requisitions in descending order according to quantity and checks the maximum number of stock transport orders per day from every location that releases stock. The system then creates stock transport orders and either executes these immediately, or forwards them for manual release.