Field help (SHTREO2) 

When checked, this box is used to process, on the reorder plan, the requests of the following type: "Shortages on location".

This type of request relates to shortages generated as a result of a sales order or work order,when the product quantity allocated to the location is greater than the location stock (function Locations/tab "Content"). These shortages are recorded in table STOALL. 
The reorder plan uses these records and displays the locations to be reordered for each product up to the maximum quantity defined for the location.

Reminder :
The location used by default is defined in the Product-site. It depends on the allocation rule combined with the location (picking, work center, etc.), defined in the Product category management rules (tab "Issue flow").
SEEINFO The reorder type selection cannot be modified. It is defined in the entry transaction used.