This alternative is only available when you are using the supplement Stock Location System.
The Calculate location requirement setting only appears when classifying by part number. If you have activated the setting in question, the requirement of locations will be calculated via the different lists. This is displayed in the lists as quantity/location, locations and location type. The list type called Average stock, is the one that is most important for this calculation.
Via the analyses that can be performed in the list - by reducing lead time, safety stock and EOQ - you can also see how this will effect the location requirement.