Jaideep, I solved this by making a custom module.

I made a new procure_method for pull rules in Odoo V18 that searches for another rule that supplies the lacking quantity to the same destination. This allows you to chain multiple pull rules and create custom routes. The benefit of this is that you can establish in the route the specific location stock should be taken from (or not) and not involve replenishment area in the process.

I would like to share my module, but I can't paste links (I don't have enough experience/karma yet).

If you want to take a look at it, search my GitHub repository "PeruginiP/Odoo_Procure_Method". It obviously needs further coding (e.g., language adaptation, normalize the coding, etc), but the first tests I made were promising enough. 

To the best of my understanding (hope am wrong), the functionality / expectation expressed in the post isn’t possible out of the box.

Multi warehouses can be configured in maybe 2 ways

1. Each WH as stand alone - To pick products from different WHs, the routes are configured sequentially, where product qty are reserved in sequence. 

WHA is resupplied by WHB which is resupplied by WHC etc.

With flexible routes in Odoo it is also possible to have products route directly to destination location, rather than the source. 

The fallout is what you describe, operations will be created to fulfill source as well as destination ie WHC to WHB to WHA, while the reserved qty would have WHC to output; WHB to output and WHA to output.

The operations for inter WH transfers would need to be canceled, as the products moves would be direct to destination location. This can be achieved by automated actions, somewhere in the lines of — operations where source and destination are WH/stock locations and have an SO as a source document.

(Believe this is what is referred in your post >>> MTS always creates the picking for the total quantity in each rule, so the sum of the pickings ends up greater than the original quantity.<<<<)

2. Have hierarchy of WHs - your reference here I believe is Virtual WH with the 5 physical WHs as child WHs. Since all WHs are same hierarchy (weighage or sequence), product reservations happen simultaneously across all of them.

A WH could be a child of another WH, so not always necessary to have a Virtual WH. It might be possible to have WHB,C,D as child of WHA

Maybe a sequence and hierarchy.. if not in WHA, reserve from virtual WH which has B,C,D as child.

It isn’t clear if your reference to FIFO is for removal strategy applied within each WH or across all WHs.

To have it applied across all WHs, you would need the hierarchy, if it is limited to within each WH then a resupply route would suffice.

Not sure if this response helps, unfortunately not a short or precise answer.