A company plans to use master planning in Dynamics 365 Supply Chain Management.

The configuration mechanism that you should use is Intercompany planning groups. Here is the explanation:

Intercompany planning groups are groups of companies that are planned together in master planning. Intercompany planning groups allow you to include planned downstream demand from other companies in your master plan, and also to peg across companies by using multilevel pegging1. You can use intercompany planning groups to plan for intercompany sales and purchases, and to optimize the production capacity across companies1.

In this scenario, you need to configure master planning for the facilities that must be planned together. To do this, you should create intercompany planning groups that include the relevant plants from different legal entities. For example, you can create an intercompany planning group that includes Plant 1, Plant 3, and Plant 4 from LegalEntityA and LegalEntityB. You can also specify the scheduling sequence for the companies in the intercompany planning group, which determines the order in which master planning is run for each company1.

The other options are not correct, because they do not involve intercompany planning. Production groups are groups of production orders that share the same parameters, such as ledger accounts and posting profiles2. Item model groups are groups of items that share the same inventory policies, such as reservation, tracking, and costing3. Coverage groups are groups of items that share the same coverage settings, such as coverage code, period, and time fence.

1: Intercompany planning 2: Production groups 3: Item model groups : [Coverage groups]