Mystery of inventory reservations in Dynamics 365 Finance and Operations

Reservation of inventory items is a very strong feature in Dynamics 365 Finance and Operations. Besides saving a lot of manual activity, it takes care of inventory transactions in various possible scenarios. Though, it is a very strong feature and hence it needs to be used carefully and cautiously as it can gets tricky sometimes.

What do you do if you have limited physical available quantity and you have reserved against a customer of class b and then customer of class A places the sales order which needs to be fulfilled or urgent basis? Would you un-reserve the quantities from first order and reserve against second? In this post, I will describe multiple scenarios of using reservations (multiple or automatic).