A transfer shipment is a shipment which transfers inventory between two warehouses. Transfer shipments are typically created from transfer requirements which have been approved. You can group a series of transfer requirements into a transfer shipment.
When you try to send an outgoing transfer shipment, the system will check that there is sufficient inventory in the originating warehouse. If there is not sufficient inventory, you will get an error, and you must modify the original transfer requirements and the shipment. If there are several inventory items available, they will be reserved for the transfer shipment based on the configuration of the warehouse.
When you receive the transfer shipment in the destination warehouse, you can receive a quantity which is different than that on the transfer shipment. The difference will be charged off as "lost in transit".