The decision about the hierarchy level at which you should have your inventory organizations defined depends on several factors.
Your inventory organization provides a clean segregation of inventory between two inventory organizations. If physical locations can establish the legal ownership of your inventory, this feature may not be necessary to establish that ownership. If you can afford that luxury then your inventory organization can be defined up higher in the organization hierarchy allowing better and expanded inventory views across multiple organizations.
Currently, Sterling Selling and Fulfillment Foundation does not allow order promising and scheduling for the sales orders of one selling organization from any other inventory organization but its own (except when inventory is maintained externally). If organizations belonging to two different legal entities must be able to source from each other, then they must share a common inventory organization.
This situation can also arise when vendors publish inventory information to organizations. A common inventory organization is designated for all vendors and the organization needing access to vendor inventory. This allows organizations to have visibility to their vendor's inventory also.
Note that even though an organization can have only one inventory organization, all supply update transactions in Sterling Selling and Fulfillment Foundation provides the capability to specify the "Inventory organization" for which the transaction is being carried out. This provides a powerful feature where a vendor can publish their inventory information to multiple inventory organizations at the same time. If the inventory is published into two different inventory organizations for the same product, the vendor must ensure that they have logically segmented their inventory to avoid over allocations.
Inventory organizations can be modeled at the legal entity level without much concern if:
If the same physical location is shared by multiple sales organizations involved in selling the same product and you need clear separation of inventory for each sales organization then the inventory organization must be modeled as each sales organization. In the future, Sterling Selling and Fulfillment Foundation may provide enhanced segmentation capabilities to handle such situations.
It is strongly suggested that you keep inventory organizations at the legal entity level, as this greatly enhances the inventory visibility across organizations.
Keeping inventory organizations at the company level gives visibility on the company's inventory to all organizations in the company. But to be able to do so, the following criteria should be evaluated.
If the above questions are answered affirmatively, the company can be modeled as the inventory organization.
Typically, the inventory organization should be modeled at the highest level possible to provide the most visibility across organizations.