Define at least one subinventory for each inventory organization of item and inventory management usage.
There are two different kinds of subinventories:
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Storage subinventories
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Receiving subinventories
Storage Subinventories
A storage subinventory is used to store material in the warehouse. Material in a storage subinventory is reflected in on-hand quantity.
Receiving Subinventories
A receiving subinventory is used to temporarily store material before placing in a storage subinventory. Material in a receiving subinventory isn't reflected in on-hand quantity. An inventory organization need not contain a receiving subinventory.
The step-by-step process to create a Subinventory has been described in detail in the below mentioned video: