What would cause Inventory shortage to be reported when plenty of inventory is actually available?

Customer has a lot controlled ingredient item stocked in two subinventories (ING and LON), one of which (LON) has a material status with transaction restrictions (WIP Issues/Returns and Completions/Returns not allowed).  Customer has not enabled status control at the material on-hand level, so the subinventory status is relevant.  Picking rule is FIFO.  There is more than enough inventory in the subinventory (ING) that has Active Material Status and no transaction restrictions.  Ingredient item is proportional scaled and incremental backflushed.  But when customer creates a production batch and tries to backflush inventory of the ingredient item, system is reporting that there