Lot No. with FIFO issue method not working as expected in production material move transactions. Error "Backflush material shortage of UNIT was found for the item in the x line of the xxxx operation in the RO order"

A stock item has 2 different lot/serial number and was included as a backflushed material in a production order. When trying to release a move transaction for this product item, get an error “Backflush material shortage of <xxx> UNIT was found for the <XXX> item in the x line of the xxxx operation in the RO <xxxx> order.” While the stock is sufficient if adding both of the lot/serial batches for this material item.