Attaching Inactive Material Status to Lot does not restrict lot for Inventory Transaction

Dear All,

We have Inactive Material Status which exclude all the transaction plus disallow reservation. We specified this material status for Lot.

In Organization items window, we enabled the check box "Lot Status Enabled" and specified above created status.

When we receive this Lot controlled item, lot is updated with above mentioned status and  in on hand it shows all transactions are disabled. But it shows Qty on hand as available to Reserve.

Also. Even it allows user to make any Inventory transaction with respect to this lot.

Can you please let us know what set up probably we are missing to make sure that when lot is assigned with Inactive status, No Transaction should occur with respect to that lot.