It is a situation where in make to stock are manufactured, and then there may arise a situation that mts stock to be converted as per customer specific order requirements and then alloted to the particular order.
how do we deal with this
Dear varada rajan
It is normally not adviceable to convert from MTS to MTO, you can do so through MB1C by using Movement Type 521E where it will ask sale order number.
Give the sale order number, material code and quantity and save. Now go to MMBE and you can see that the quantity what you blocked in MB1C is shown against "Sales Order Stock". If you double click that, it will show against which sale order, the quantity is reserved.