Any order that comes in to SellerCloud will reserve the ordered item and reduce the aggregated quantity. When the order is drop shipped, the inventory levels are restored because the item is actually not leaving your warehouse. There are times, however, when its advisable to not replenish your inventory. In a scenario where the vendor will allow drop shipping but limits the amount of available items (for example, allows 100 items total and will not replenish) its a good idea to create a separate warehouse with the inventory allowed by the vendor, and enable the option which will prevent your inventory of that warehouse from replenishing. This will reduce the risk of drop shipping unavailable items.
Under Settings > Company Settings > Company Name > Toolbox > Vendors >DropShip Preferences and click the option Do Not Count Inventory for DropShip PO. This setting must be enabled first in the Client Settings - Allow to Ignore Inventory in Purchase Order.