Installation from DVD on IBM LinuxONE fails with '/dev/root does not exist'

Issue

• Unable to install RHEL 7 on IBM LinuxONE

• The boot into installer on IBM LinuxONE fails with error:

  The boot from DVD stops with the following message:
  "Warning: /dev/root does not exist
  Generating ""/run/initramfs/rdsosreport.txt"""
  "Entering emergency mode. Exit the shell to continue.
  Type ""journalctl"" to view system logs.
  You might want to save ""/run/initramfs/rdsosreport.txt"" to a USB stick or /boot
  after mounting them and attach it to a bug report."
  dracut:/#
  

  DVD image is downloaded from Customer Portal (rhel-server-7.X-s390x-dvd.iso). Same error appears with boot image (rhel-server-7.X-s390x-boot.iso)

• Setting required parameter inst.stage2 and inst.repo to DVD or FTP source does not solve the issue.