Dear Sam
You understanding of formula is correct.
As in your case A is the header Material of type FERT or HALB and the x and y are BOM components. So always lot size can be referred to the material in header, which requires the components for its production.
Let us suppose there are 1000 Components required to produce A. And all the 100 components are available with stores in different quantities then what is easier to plan your production on your material i.e. A or depending your components x.y....998 more components.
Also, to my knowledge. through standard SAP we can not plan our production based on the components available to us.
Regards
RS
