Each product variant has a stock keeping unit (SKU).
Each variant holds information about quantity at hand, quantity allocated for already placed orders and quantity available.
Example: There are five boxes of shoes. Three of them have already been sold to customers but were not yet dispatched for shipment. The stock records quantity is 5, quantity allocated is 3 and quantity available is 2.
Each variant also has a cost price (the price that your store had to pay to obtain it).
A variant is in stock if it has unallocated quantity.
The highest quantity that can be ordered is the available quantity in product variant.
Allocating Stock for New Orders
Once an order is placed, quantity needed to fulfil each order line is immediately marked as allocated.
Example: A customer places an order for another box of shoes. The stock records quantity is 5, quantity allocated is now 4 and quantity available becomes 1.
Decreasing Stock After Shipment
Once order lines are marked as shipped, each corresponding stock record will have both its quantity at hand and quantity allocated decreased by the number of items shipped.
Example: Two boxes of shoes from warehouse A are shipped to a customer. The stock records quantity is now 3, quantity allocated becomes 2 and quantity available stays at 1.