When you receive an order, if you don't have enough product to completely fulfill an order, you can click "Edit item availability" on the order.
From there, for each product that was ordered, you can input how much product you have available. You can also mark a product as "out of stock."
If you input that you have less product available than was ordered, the retailer will be notified that you only have a portion of the product available, and the order will be processed with what you have available.
If you mark a product as "out of stock," no other retailers will be able to purchase it until you mark it as available.