A scheduling agreement is a long-term agreement with a vendor for the supply of materials or services at predefined dates and quantities. To enable classic MRP to automatically create schedule lines in case of material shortage, you must do the following:
Add the agreement to the source list and mark it for MRP relevance. The source list is a list of possible sources of supply for a material, such as vendors, contracts, or scheduling agreements. By adding the agreement to the source list and setting the MRP indicator, you specify that the agreement is a valid and preferred source of supply for the material.
Set the creation indicator for delivery schedule lines on the initial screen of the MRP run. The creation indicator determines whether the MRP run creates procurement proposals, such as purchase requisitions, planned orders, or delivery schedule lines. By setting the creation indicator for delivery schedule lines, you instruct the MRP run to create schedule lines for the scheduling agreement, based on the material requirements and the agreement conditions.
Adding the agreement to the quota arrangement and marking it for MRP relevance is not necessary, as the quota arrangement is used to distribute the total requirements of a material among several sources of supply.
Setting the creation indicator for purchase requisition on the initial screen of the MRP run is not correct, as the purchase requisition is a different type of procurement proposal than the delivery schedule line. References: Scheduling Agreement | SAP Help Portal, Source List | SAP Help Portal, MRP Run | SAP Help Portal.