You plan to use process orders in a Lot-based make-to-stock (MTS) scenario.

Comprehensive and Detailed 150 to 250 words of Explanation From SAP S/4HANA Cloud Public Edition, Management Accounting documents:

Process manufacturing is used in industries where goods are produced in batches using recipes, such as food or chemicals. For lot-based make-to-stock using process orders, specific master data is required. First, a Bill of Materials (BOM) (Option A) is needed to define the quantities of raw materials and ingredients required for the batch. Second, instead of a routing (which is for discrete manufacturing), process orders require a Master recipe (Option B)104. The recipe contains the detailed phases and instructions for the manufacturing process105.

Thirdly, Resources (Option E) must be defined106. In process manufacturing, "resources" are the equivalent of "work centers" in discrete manufacturing, representing the equipment or labor required to execute the recipe's phases107. While a Material Master Record (Option C) is obviously required for the system to function, it is often excluded from these specific lists that focus on the production-specific data structures like BOMs and recipes. Routing (Option D) is strictly for discrete production orders and is not used with process orders