How starting lot number is incremented when lot generation is set as "At item level"

We are trying to understand how lot number is being generated in our environment (Oracle EBS R12.1.3):

In the Organization Parameters, the lot generation is set as "At item level".

We set the initial value in the item master (at the org level & master level) as 100000 but it gets incremented in a non-continuous manner and sometimes (not that often though) even goes back to an old number (which was previously missed). Although the complete lot number (Prefix + Number) is always unique.

The lot number sequence does have a cache size of 1000 but not sure if this sequence is used when lot generation is set as "At item level".