CTO order pegging missing in unconstrained supply plan

Summary:

We have a manufacturing org(MFG) and Distribution center(DC). We created an ATO model item and the ATO model item available in both MFG and DC orgs. Sourcing rules were created for the ATO model item in the following format.

Org

Item

source type

source from

DC

ATO Model

Transfer from

MFG

MFG

ATO Model

Make At MFG

We have back-to-back order flag set for the ATO model item as No.

Now when we create the Sales order in DC, based on the options selected a star item is created in DC & MFG and the same was collected in to planning and ran supply plan. After running the supply plan, when we reviewed the supply plan pegging, it is observed that for the sales order a planned order (to create transfer order) recommended by the plan. Then there is no further pegging in the MFG org to create supply. even though the sourcing details were properly defined, why supply plan unable to recommend lower level pegging.