In-house production is not intended for material & status &

What causes this issue?

You want to create a production order for a material whose status does
not allow in-house production.

How to fix this error?

There are two possibilities:
Choose a different material.
Change the MM/PP status of the material to a status that allows
in-house production. The MM/PP status is specified in the material
master record.

Error message extract from SAP system. Copyright SAP SE.