Here we discuss how to manage Inventory in Magento. Magento strongly support to create and manage inventory for product. It helps to maintain the products stock related functions.\r\nMagento manage Inventory on the basis of two level:\r\n\r\n\tStore Level\r\n\tProduct Level\r\n\r\n1. Store Level Inventory:\r\n\r\nStep 1. Go to Admin>System>Configuration>Inventory\r\n\r\n\r\n\r\nFrom here, you can do things related to manage your stocks. Like, you will decide whether you want to allow Backorder, How will display product availability, whether it is Out of Stock or In Stock, will store stock decreases, when order is placed, etc.\r\n\r\n2. Click on Stock Options\r\n\r\n\r\n\r\nA. Stock Options:\r\n\r\n\r\n\tSet item's status to be In stock when order is canceled:\r\n\r\n\tYes: When Order is canceled, it automatically return to Stock\r\n\tNo: It will not return to stock\r\n\r\n\r\n\tDecrease stock when order is placed:\r\n\r\n\tYes: It decrease quantities of stock, when order is placed, otherwise not\r\n\r\n\r\n\tDisplay out of stock products:\r\n\r\n\tBy default, out of product is not display in catalog, If it is set to Yes, it will display product in frontend after product is Out of stock\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\tOnly X left threshold:\r\n\r\n\tBy default it is disabled. You can set threshold number, it will display the message Only X left, when product availability is upto entered number.\r\n\r\n\r\n\r\n\r\n\r\n\r\n\tDisplay products availability in stock in frontend:\r\n\r\n\tIf it is set to Yes it will display Product status that is Availability: In Stock in frontend.\r\n\r\n\r\n\r\n\r\n\r\nB. Complete Product Stock Option \r\n\r\n\r\n\r\n\tManage Stock: Set Yes to manage stock otherwise you can't manage stock.\r\n\tBackorders: It includes three options.\r\n\r\n\r\n\tNo Backorders: It will not allow to place order when product is Out of Stock.\r\n\tAllow qty below Zero: It allow to place order when product with negative inventory.\r\n\tAllow qty below Zero & Notify Customer: It allow to place order when product with negative inventory and give notification to customer.\r\n\r\n\r\n\r\n\tMaximum Quantity allowed in Shopping Cart: Set the maximum limit of product that your customer can buy.\r\n\tQty for item's status to become Out of Stock: By default it is set to zero.\r\n\tMinimum Quantity allowed in Shopping Cart: You can set minimum limit of qty, that customer must to add in shopping cart.\r\n\tNotify for quantity below: It gives the notification to customer when product is not available of their demanding quantities.\r\n\tEnable qty increment: If it is set to yes, product will be sell only increment of entered value.\r\n\r\n\r\n\r\nC. Save Configuration\r\n\r\n2. Product Level Inventory\r\n\r\n\tInventory Setting during Product Creation:Here, we required to set up some fields like,\r\n\r\n\tQty: Enter number of quantities, that you want to manage in your store.\r\n\tStock Availability: Set Stock Availability to In Stock to display product in frontend otherwise it will not display.\r\n\r\nThen Save Product.