When returning a lot-tracked item to a different warehouse, currently, the Allocations screen (on Sales Order, and on the Shipment) does not show the lot number with which the original item was sold. An example: item MACHINE1 was sold from RETAIL warehouse with lot number K01. The item is being returned to warehouse WHOLESALE. If the WHOLESALE warehouse has this item and the lot numbers in the WHOLESALE are W01, W02, and W03, when you pull up the Allocations screen, the W01, W02, W03 lot numbers will be available for selection, although we're returning K01. Manual override to use K01 also doesn't work (errors out).
The suggestion is: to expand the options for lot numbers from just this warehouse lot numbers to this warehouse lot numbers + lot number of the item being returned.