Every Outbound delivery order line requires creating a pick task and confirming the task. The pick denial happened at two different stages, one is at task creation time and another at pick confirmation time from user. This blog post explains the concept of pick denial along with bin denial with required settings in EWM. SAP 
Pick Denial describes the process of reducing a line item’s quantity of a warehouse request (delivery) in EWM and communicating that change back to the ERP system.
Purpose of SAP Pick denial :It is possible that EWM cannot create a new warehouse task, or can only create a warehouse task with a partial quantity based on the available stock in EWM. This pick denial caused by one of the following reasons:
SAP EWM cannot find any, or not enough, stock to fulfill the requested quantity of the warehouse request at the time of task creation. (System decided)
User performed a storage bin denial. (User decided)
In these cases there is a pick denial.
To understand more of SAP Pick Denial, we need to distinguish between “Bin Denial” and “Pick Denial” as below
A Bin Denial is entered by the user during picking and basically says that the product is not available in the bin with the desired quantity. However bin denial should never adopt the delivery quantity. The user cannot decide whether the product is stored somewhere else. Thus a Bin Denial will trigger a new WT creation to look for other bins.
A Pick Denial is triggered by the system during WT creation, if the product cannot be found in the whole warehouse. This can happen during wave release, or also during WT creation for the bin denial. So if during a bin no other stock for the product is found, this can trigger pick denial. The pick denial depends on the settings in the warehouse process type and will adopt the delivery item quantity if customized.
If the bin denial finds the stock on a different bin, it will not trigger pick denial.
Activated pick denial at warehouse number level:
IMG for EWM under Goods Issue Process –Pick Denial –Activate Pick Denial at Warehouse Number Level.
Activated pick denial at warehouse process type level:
IMG for EWM under Goods Issue Process-Pick Denial- Activate Pick Denial at Warehouse Process Type Level.
Defined your own exception codes for calling exception handling, and have assigned these to the internal exception codes defined by SAP.
Depending on the wave setting the after pick denial the WT from alternative bin can be created right away or at a later point of time. The wave setting “behaviour during pick denial on wave header, the system should decide not create WT right away, but wait for the next wave release, or even un-assign the item from the current wave and trigger wave assignment to a future wave.
You can find the setting in wave header data at transaction /scwm/wave or in the wave template /scwm/wavetmp as shown below.
More details from SAP on procedure to check the exception codes used during picking
More details from SAP on Pick Denial process
More details from SAP on Partial picking process
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