What option should be selected to generate serial or batch numbers only when a packing slip and picking list registration is posted?

Selecting the option to generate serial or batch numbers "On physical update" ensures that these numbers are created only at the moment a packing slip and picking list registration is posted. This approach aligns with the need for proper inventory tracking and management, as it allows for the generation of serial numbers or batch numbers to be tied directly to the physical movement of goods.

By choosing this option, you effectively link the generation of serial and batch numbers to the actual physical updates in inventory rather than at the time of other transactions, which could lead to discrepancies or premature number assignments. This method promotes better accuracy and accountability in inventory management, as it ensures that tracking numbers are assigned when they are actually needed in relation to the goods being processed.

The other options might generate numbers at different stages of the transaction process, which could potentially complicate inventory tracking and management. For example, generating numbers immediately may lead to confusion if items are moved or modified before the actual packing slip registration is completed.