Hi Sudeep,
The purpose of this is to do basic scheduling when MRP is executed. On the other hand is you want to do lead time time scheduling then maintain routing accordingly and select 2 (Lead Time Scheduling and Capacity Planning) while doing MRP run.
To get more on this refer SAP note
152319 - Consulting: Scheduling of planned order for routing
Let us know if it resolved your issue.
Regards
Rahul