diff --git a/erpnext/stock/dashboard/item_dashboard.js b/erpnext/stock/dashboard/item_dashboard.js
index 4a52526..2748436 100644
--- a/erpnext/stock/dashboard/item_dashboard.js
+++ b/erpnext/stock/dashboard/item_dashboard.js
@@ -90,7 +90,7 @@
 		data.forEach(function(d) {
 			d.actual_or_pending = d.projected_qty + d.reserved_qty + d.reserved_qty_for_production;
 			d.pending_qty = 0;
-			d.total_reserved = d.reserved_qty + d.reserved_qty_for_production;
+			d.total_reserved = d.reserved_qty + d.reserved_qty_for_production + d.reserved_qty_for_sub_contract;
 			if(d.actual_or_pending > d.actual_qty) {
 				d.pending_qty = d.actual_or_pending - d.actual_qty;
 			}
diff --git a/erpnext/stock/dashboard/item_dashboard.py b/erpnext/stock/dashboard/item_dashboard.py
index 0d75a9a..f95daaf 100644
--- a/erpnext/stock/dashboard/item_dashboard.py
+++ b/erpnext/stock/dashboard/item_dashboard.py
@@ -26,13 +26,14 @@
 	return frappe.db.sql('''
 	select
 		b.item_code, b.warehouse, b.projected_qty, b.reserved_qty,
-		b.reserved_qty_for_production, b.actual_qty, b.valuation_rate, i.item_name
+		b.reserved_qty_for_production, b.reserved_qty_for_sub_contract, b.actual_qty, b.valuation_rate, i.item_name
 	from
 		tabBin b, tabItem i
 	where
 		b.item_code = i.name
 		and
-		(b.projected_qty != 0 or b.reserved_qty != 0 or b.reserved_qty_for_production != 0 or b.actual_qty != 0)
+		(b.projected_qty != 0 or b.reserved_qty != 0 or b.reserved_qty_for_production != 0 
+		or b.reserved_qty_for_sub_contract != 0 or b.actual_qty != 0)
 		{conditions}
 	order by
 		{sort_by} {sort_order}
diff --git a/erpnext/stock/doctype/bin/bin.json b/erpnext/stock/doctype/bin/bin.json
index 1f6e9e1..def817b 100644
--- a/erpnext/stock/doctype/bin/bin.json
+++ b/erpnext/stock/doctype/bin/bin.json
@@ -302,6 +302,36 @@
    "bold": 0, 
    "collapsible": 0, 
    "columns": 0, 
+   "fieldname": "reserved_qty_for_sub_contract", 
+   "fieldtype": "Float", 
+   "hidden": 0, 
+   "ignore_user_permissions": 0, 
+   "ignore_xss_filter": 0, 
+   "in_filter": 0, 
+   "in_global_search": 0, 
+   "in_list_view": 0, 
+   "in_standard_filter": 0, 
+   "label": "Reserved Qty for sub contract", 
+   "length": 0, 
+   "no_copy": 0, 
+   "permlevel": 0, 
+   "precision": "", 
+   "print_hide": 0, 
+   "print_hide_if_no_value": 0, 
+   "read_only": 0, 
+   "remember_last_selected_value": 0, 
+   "report_hide": 0, 
+   "reqd": 0, 
+   "search_index": 0, 
+   "set_only_once": 0, 
+   "unique": 0
+  }, 
+  {
+   "allow_bulk_edit": 0, 
+   "allow_on_submit": 0, 
+   "bold": 0, 
+   "collapsible": 0, 
+   "columns": 0, 
    "fieldname": "ma_rate", 
    "fieldtype": "Float", 
    "hidden": 1, 
@@ -463,7 +493,7 @@
  "issingle": 0, 
  "istable": 0, 
  "max_attachments": 0, 
- "modified": "2017-06-13 13:06:32.601505", 
+ "modified": "2017-11-22 08:14:30.615638", 
  "modified_by": "Administrator", 
  "module": "Stock", 
  "name": "Bin", 
diff --git a/erpnext/stock/doctype/bin/bin.py b/erpnext/stock/doctype/bin/bin.py
index f2c214d..430d9fb 100644
--- a/erpnext/stock/doctype/bin/bin.py
+++ b/erpnext/stock/doctype/bin/bin.py
@@ -61,7 +61,7 @@
 	def set_projected_qty(self):
 		self.projected_qty = (flt(self.actual_qty) + flt(self.ordered_qty)
 			+ flt(self.indented_qty) + flt(self.planned_qty) - flt(self.reserved_qty)
-			- flt(self.reserved_qty_for_production))
+			- flt(self.reserved_qty_for_production) - flt(self.reserved_qty_for_sub_contract))
 
 	def get_first_sle(self):
 		sle = frappe.db.sql("""
@@ -90,6 +90,42 @@
 		self.db_set('reserved_qty_for_production', flt(self.reserved_qty_for_production))
 		self.db_set('projected_qty', self.projected_qty)
 
+	def update_reserved_qty_for_sub_contracting(self):
+		#reserved qty
+		reserved_qty_for_sub_contract = frappe.db.sql('''
+			select ifnull(sum(itemsup.required_qty),0)
+			from `tabPurchase Order` po, `tabPurchase Order Item Supplied` itemsup
+			where
+				itemsup.rm_item_code = %s
+				and itemsup.parent = po.name
+				and po.docstatus = 1
+				and po.is_subcontracted = 'Yes'
+				and po.status != 'Closed'
+				and po.per_received < 100
+				and itemsup.reserve_warehouse = %s''', (self.item_code, self.warehouse))[0][0]
+
+		#Get Transferred Entries
+		materials_transferred = frappe.db.sql("""
+			select
+				ifnull(sum(transfer_qty),0)
+			from
+				`tabStock Entry` se, `tabStock Entry Detail` sed, `tabPurchase Order` po
+			where
+				se.docstatus=1
+				and se.purpose='Subcontract'
+				and ifnull(se.purchase_order, '') !=''
+				and sed.item_code = %s
+				and se.name = sed.parent
+				and se.purchase_order = po.name
+				and po.docstatus = 1
+				and po.is_subcontracted = 'Yes'
+				and po.status != 'Closed'
+				and po.per_received < 100
+		""", (self.item_code))[0][0]
+
+		self.db_set('reserved_qty_for_sub_contract', (reserved_qty_for_sub_contract - materials_transferred))
+		self.set_projected_qty()
+		self.db_set('projected_qty', self.projected_qty)
 
 def on_doctype_update():
 	frappe.db.add_index("Bin", ["item_code", "warehouse"])
diff --git a/erpnext/stock/doctype/purchase_receipt/purchase_receipt.py b/erpnext/stock/doctype/purchase_receipt/purchase_receipt.py
index 29f3553..2a962cc 100644
--- a/erpnext/stock/doctype/purchase_receipt/purchase_receipt.py
+++ b/erpnext/stock/doctype/purchase_receipt/purchase_receipt.py
@@ -122,7 +122,8 @@
 			self.update_billing_status()
 
 		# Updating stock ledger should always be called after updating prevdoc status,
-		# because updating ordered qty in bin depends upon updated ordered qty in PO
+		# because updating ordered qty, reserved_qty_for_subcontract in bin
+		# depends upon updated ordered qty in PO
 		self.update_stock_ledger()
 
 		from erpnext.stock.doctype.serial_no.serial_no import update_serial_nos_after_submit
diff --git a/erpnext/stock/doctype/stock_entry/stock_entry.py b/erpnext/stock/doctype/stock_entry/stock_entry.py
index 7d5af5f..5aeba7c 100644
--- a/erpnext/stock/doctype/stock_entry/stock_entry.py
+++ b/erpnext/stock/doctype/stock_entry/stock_entry.py
@@ -11,6 +11,7 @@
 from erpnext.stock.get_item_details import get_bin_details, get_default_cost_center, get_conversion_factor
 from erpnext.stock.doctype.batch.batch import get_batch_no, set_batch_nos, get_batch_qty
 from erpnext.manufacturing.doctype.bom.bom import validate_bom_no
+from erpnext.stock.utils import get_bin
 import json
 
 class IncorrectValuationRateError(frappe.ValidationError): pass
@@ -63,17 +64,22 @@
 		self.calculate_rate_and_amount(update_finished_item_rate=False)
 
 	def on_submit(self):
+
 		self.update_stock_ledger()
 
 		from erpnext.stock.doctype.serial_no.serial_no import update_serial_nos_after_submit
 		update_serial_nos_after_submit(self, "items")
 		self.update_production_order()
 		self.validate_purchase_order()
+		if self.purchase_order and self.purpose == "Subcontract":
+			self.update_purchase_order_supplied_items()
 		self.make_gl_entries()
 
 	def on_cancel(self):
 		self.update_stock_ledger()
 		self.update_production_order()
+		if self.purchase_order and self.purpose == "Subcontract":
+			self.update_purchase_order_supplied_items()
 		self.make_gl_entries_on_cancel()
 
 	def validate_purpose(self):
@@ -403,7 +409,7 @@
 		"""validation: finished good quantity should be same as manufacturing quantity"""
 		items_with_target_warehouse = []
 		for d in self.get('items'):
-			if d.bom_no and flt(d.transfer_qty) != flt(self.fg_completed_qty) and (d.t_warehouse != getattr(self, "pro_doc", frappe._dict()).scrap_warehouse):
+			if self.purpose != "Subcontract" and d.bom_no and flt(d.transfer_qty) != flt(self.fg_completed_qty) and (d.t_warehouse != getattr(self, "pro_doc", frappe._dict()).scrap_warehouse):
 				frappe.throw(_("Quantity in row {0} ({1}) must be same as manufactured quantity {2}"). \
 					format(d.idx, d.transfer_qty, self.fg_completed_qty))
 
@@ -582,19 +588,32 @@
 						frappe.throw(_("Manufacturing Quantity is mandatory"))
 
 					item_dict = self.get_bom_raw_materials(self.fg_completed_qty)
+
+					#Get PO Supplied Items Details
+					if self.purchase_order and self.purpose == "Subcontract":
+						#Get PO Supplied Items Details
+						item_wh = frappe._dict(frappe.db.sql("""
+							select rm_item_code, reserve_warehouse 
+							from `tabPurchase Order` po, `tabPurchase Order Item Supplied` poitemsup
+							where po.name = poitemsup.parent
+								and po.name = %s""",self.purchase_order))
 					for item in item_dict.values():
 						if self.pro_doc and not self.pro_doc.skip_transfer:
 							item["from_warehouse"] = self.pro_doc.wip_warehouse
-
+						#Get Reserve Warehouse from PO
+						if self.purchase_order and self.purpose=="Subcontract":
+							item["from_warehouse"] = item_wh.get(item.item_code)
 						item["to_warehouse"] = self.to_warehouse if self.purpose=="Subcontract" else ""
 
 					self.add_to_stock_entry_detail(item_dict)
 
-					scrap_item_dict = self.get_bom_scrap_material(self.fg_completed_qty)
-					for item in scrap_item_dict.values():
-						if self.pro_doc and self.pro_doc.scrap_warehouse:
-							item["to_warehouse"] = self.pro_doc.scrap_warehouse
-					self.add_to_stock_entry_detail(scrap_item_dict, bom_no=self.bom_no)
+					if self.purpose != "Subcontract":
+						scrap_item_dict = self.get_bom_scrap_material(self.fg_completed_qty)
+						for item in scrap_item_dict.values():
+							if self.pro_doc and self.pro_doc.scrap_warehouse:
+								item["to_warehouse"] = self.pro_doc.scrap_warehouse
+
+						self.add_to_stock_entry_detail(scrap_item_dict, bom_no=self.bom_no)
 
 			# fetch the serial_no of the first stock entry for the second stock entry
 			if self.production_order and self.purpose == "Manufacture":
@@ -782,7 +801,7 @@
 	def add_to_stock_entry_detail(self, item_dict, bom_no=None):
 		expense_account, cost_center = frappe.db.get_values("Company", self.company, \
 			["default_expense_account", "cost_center"])[0]
-				
+
 		for d in item_dict:
 			stock_uom = item_dict[d].get("stock_uom") or frappe.db.get_value("Item", d, "stock_uom")
 			
@@ -833,7 +852,20 @@
 						if getdate(self.posting_date) > getdate(expiry_date):
 							frappe.throw(_("Batch {0} of Item {1} has expired.").format(item.batch_no, item.item_code))
 
+	def update_purchase_order_supplied_items(self):
+		#Get PO Supplied Items Details
+		item_wh = frappe._dict(frappe.db.sql("""
+			select rm_item_code, reserve_warehouse 
+			from `tabPurchase Order` po, `tabPurchase Order Item Supplied` poitemsup
+			where po.name = poitemsup.parent
+			and po.name = %s""", self.purchase_order))
 
+		#Update reserved sub contracted quantity in bin based on Supplied Item Details
+		for d in self.get("items"):
+			reserve_warehouse = item_wh.get(d.item_code)
+			stock_bin = get_bin(d.item_code, reserve_warehouse)
+			stock_bin.update_reserved_qty_for_sub_contracting()
+	
 @frappe.whitelist()
 def move_sample_to_retention_warehouse(company, items):
 	if isinstance(items, basestring):
diff --git a/erpnext/stock/doctype/stock_entry/test_stock_entry.py b/erpnext/stock/doctype/stock_entry/test_stock_entry.py
index b590822..a5814f7 100644
--- a/erpnext/stock/doctype/stock_entry/test_stock_entry.py
+++ b/erpnext/stock/doctype/stock_entry/test_stock_entry.py
@@ -562,9 +562,8 @@
 
 		rm_cost = 0
 		for d in stock_entry.get("items"):
-			if d.s_warehouse:
+			if d.item_code != "_Test FG Item 2":
 				rm_cost += flt(d.amount)
-
 		fg_cost = filter(lambda x: x.item_code=="_Test FG Item 2", stock_entry.get("items"))[0].amount
 		self.assertEqual(fg_cost,
 			flt(rm_cost + bom_operation_cost + production_order.additional_operating_cost, 2))
diff --git a/erpnext/stock/page/stock_balance/stock_balance.js b/erpnext/stock/page/stock_balance/stock_balance.js
index 16a85fa..85ea5b1 100644
--- a/erpnext/stock/page/stock_balance/stock_balance.js
+++ b/erpnext/stock/page/stock_balance/stock_balance.js
@@ -48,6 +48,7 @@
 				{fieldname: 'projected_qty', label: __('Projected qty')},
 				{fieldname: 'reserved_qty', label: __('Reserved for sale')},
 				{fieldname: 'reserved_qty_for_production', label: __('Reserved for manufacturing')},
+				{fieldname: 'reserved_qty_for_sub_contract', label: __('Reserved for sub contracting')},
 				{fieldname: 'actual_qty', label: __('Actual qty in stock')},
 			]
 		},
diff --git a/erpnext/stock/report/stock_projected_qty/stock_projected_qty.py b/erpnext/stock/report/stock_projected_qty/stock_projected_qty.py
index 21287b9..89a256c 100644
--- a/erpnext/stock/report/stock_projected_qty/stock_projected_qty.py
+++ b/erpnext/stock/report/stock_projected_qty/stock_projected_qty.py
@@ -16,6 +16,7 @@
 		_("UOM") + ":Link/UOM:100", _("Actual Qty") + ":Float:100", _("Planned Qty") + ":Float:100",
 		_("Requested Qty") + ":Float:110", _("Ordered Qty") + ":Float:100",
 		_("Reserved Qty") + ":Float:100", _("Reserved Qty for Production") + ":Float:100",
+		_("Reserved for sub contracting") + ":Float:100",
 		_("Projected Qty") + ":Float:100", _("Reorder Level") + ":Float:100", _("Reorder Qty") + ":Float:100",
 		_("Shortage Qty") + ":Float:100"]
 
@@ -33,7 +34,8 @@
 			continue
 
 		# item = item_map.setdefault(bin.item_code, get_item(bin.item_code))
-		company = warehouse_company.setdefault(bin.warehouse, frappe.db.get_value("Warehouse", bin.warehouse, "company"))
+		company = warehouse_company.setdefault(bin.warehouse,
+			frappe.db.get_value("Warehouse", bin.warehouse, "company"))
 
 		if filters.brand and filters.brand != item.brand:
 			continue
@@ -52,7 +54,8 @@
 
 		data.append([item.name, item.item_name, item.description, item.item_group, item.brand, bin.warehouse,
 			item.stock_uom, bin.actual_qty, bin.planned_qty, bin.indented_qty, bin.ordered_qty,
-			bin.reserved_qty, bin.reserved_qty_for_production, bin.projected_qty, re_order_level, re_order_qty, shortage_qty])
+			bin.reserved_qty, bin.reserved_qty_for_production, bin.reserved_qty_for_sub_contract,
+			bin.projected_qty, re_order_level, re_order_qty, shortage_qty])
 
 	return data
 
@@ -71,7 +74,7 @@
 				warehouse_details.rgt))
 
 	bin_list = frappe.db.sql("""select item_code, warehouse, actual_qty, planned_qty, indented_qty,
-		ordered_qty, reserved_qty, reserved_qty_for_production, projected_qty
+		ordered_qty, reserved_qty, reserved_qty_for_production, reserved_qty_for_sub_contract, projected_qty
 		from tabBin bin {conditions} order by item_code, warehouse
 		""".format(conditions=" where " + " and ".join(conditions) if conditions else ""), as_dict=1)
 
diff --git a/erpnext/stock/stock_balance.py b/erpnext/stock/stock_balance.py
index 6a4ac43..49909d9 100644
--- a/erpnext/stock/stock_balance.py
+++ b/erpnext/stock/stock_balance.py
@@ -150,7 +150,7 @@
 	if mismatch:
 		bin.projected_qty = (flt(bin.actual_qty) + flt(bin.ordered_qty) +
 			flt(bin.indented_qty) + flt(bin.planned_qty) - flt(bin.reserved_qty)
-			- flt(bin.reserved_qty_for_production))
+			- flt(bin.reserved_qty_for_production)) - flt(bin.reserved_qty_for_sub_contract)
 
 		bin.save()