When users want to over-fulfill a Dropship Transaction, they must mark both below preferences under Setup > Accounting > Accounting Preferences > Order Management Tab
1. Allow Overage on Item Fulfillments.
2. Allow Overage on Item Receipts.
If the Allow Overage on Item Receipts is not marked, they will encounter an error message when overfulfilling: Notice: "You cannot over-fulfil an item unless you have selected Allow overage on item fulfilment."