diff --git a/packages/Webkul/Product/src/Database/Factories/ProductOrderedInventoryFactory.php b/packages/Webkul/Product/src/Database/Factories/ProductOrderedInventoryFactory.php
new file mode 100644
index 000000000..b5139c73f
--- /dev/null
+++ b/packages/Webkul/Product/src/Database/Factories/ProductOrderedInventoryFactory.php
@@ -0,0 +1,31 @@
+<?php
+
+namespace Webkul\Product\Database\Factories;
+
+use Illuminate\Database\Eloquent\Factories\Factory;
+use Webkul\Product\Models\Product;
+use Webkul\Product\Models\ProductOrderedInventory;
+
+class ProductOrderedInventoryFactory extends Factory
+{
+    /**
+     * The name of the factory's corresponding model.
+     *
+     * @var string
+     */
+    protected $model = ProductOrderedInventory::class;
+
+    /**
+     * Define the model's default state.
+     *
+     * @return array
+     */
+    public function definition(): array
+    {
+        return [
+            'qty'        => $this->faker->numberBetween(100, 200),
+            'product_id' => Product::factory(),
+            'channel_id' => 1,
+        ];
+    }
+}
diff --git a/packages/Webkul/Product/src/Models/ProductOrderedInventory.php b/packages/Webkul/Product/src/Models/ProductOrderedInventory.php
index ab5423cf4..992d93ac9 100644
--- a/packages/Webkul/Product/src/Models/ProductOrderedInventory.php
+++ b/packages/Webkul/Product/src/Models/ProductOrderedInventory.php
@@ -2,15 +2,29 @@
 
 namespace Webkul\Product\Models;
 
+use Illuminate\Database\Eloquent\Factories\Factory;
+use Illuminate\Database\Eloquent\Factories\HasFactory;
 use Illuminate\Database\Eloquent\Model;
-use Webkul\Inventory\Models\InventorySourceProxy;
 use Webkul\Core\Models\ChannelProxy;
 use Webkul\Product\Contracts\ProductOrderedInventory as ProductOrderedInventoryContract;
+use Webkul\Product\Database\Factories\ProductOrderedInventoryFactory;
 
 class ProductOrderedInventory extends Model implements ProductOrderedInventoryContract
 {
+    use HasFactory;
+
+    /**
+     * Timestamps.
+     *
+     * @var bool
+     */
     public $timestamps = false;
 
+    /**
+     * Fillables.
+     *
+     * @var array
+     */
     protected $fillable = [
         'qty',
         'product_id',
@@ -19,6 +33,8 @@ class ProductOrderedInventory extends Model implements ProductOrderedInventoryCo
 
     /**
      * Get the channel owns the inventory.
+     *
+     * @return \Illuminate\Database\Eloquent\Relations\BelongsTo
      */
     public function channel()
     {
@@ -27,9 +43,21 @@ class ProductOrderedInventory extends Model implements ProductOrderedInventoryCo
 
     /**
      * Get the product that owns the product inventory.
+     *
+     * @return \Illuminate\Database\Eloquent\Relations\BelongsTo
      */
     public function product()
     {
         return $this->belongsTo(ProductProxy::modelClass());
     }
-}
\ No newline at end of file
+
+    /**
+     * Create a new factory instance for the model.
+     *
+     * @return Factory
+     */
+    protected static function newFactory(): Factory
+    {
+        return ProductOrderedInventoryFactory::new ();
+    }
+}
diff --git a/packages/Webkul/Sales/src/Repositories/OrderItemRepository.php b/packages/Webkul/Sales/src/Repositories/OrderItemRepository.php
index cd3803e8b..bc2574558 100755
--- a/packages/Webkul/Sales/src/Repositories/OrderItemRepository.php
+++ b/packages/Webkul/Sales/src/Repositories/OrderItemRepository.php
@@ -2,8 +2,6 @@
 
 namespace Webkul\Sales\Repositories;
 
-use Illuminate\Container\Container as App;
-use Illuminate\Support\Facades\Event;
 use Illuminate\Support\Facades\Log;
 use Webkul\Core\Eloquent\Repository;
 use Webkul\Sales\Contracts\OrderItem;
@@ -11,16 +9,18 @@ use Webkul\Sales\Contracts\OrderItem;
 class OrderItemRepository extends Repository
 {
     /**
-     * Specify Model class name
+     * Specify model class name.
      *
      * @return string
      */
-    function model()
+    public function model()
     {
         return OrderItem::class;
     }
 
     /**
+     * Create.
+     *
      * @param  array  $data
      * @return \Webkul\Sales\Contracts\OrderItem
      */
@@ -37,6 +37,8 @@ class OrderItemRepository extends Repository
     }
 
     /**
+     * Collect totals.
+     *
      * @param  \Webkul\Sales\Contracts\OrderItem  $orderItem
      * @return \Webkul\Sales\Contracts\OrderItem
      */
@@ -96,6 +98,8 @@ class OrderItemRepository extends Repository
     }
 
     /**
+     * Manage inventory.
+     *
      * @param  \Webkul\Sales\Contracts\OrderItem  $orderItem
      * @return void
      */
@@ -125,14 +129,14 @@ class OrderItemRepository extends Repository
                 if (isset($item->qty_ordered)) {
                     $qty = $item->qty_ordered;
                 } else {
-                    Log::info('OrderItem has no qty_ordered', ['orderItem' => $item, 'product' => $item->product]);
+                    Log::info('OrderItem has no `qty_ordered`.', ['orderItem' => $item, 'product' => $item->product]);
                     if (isset($item->parent->qty_ordered)) {
                         $qty = $item->parent->qty_ordered;
                     } else {
-                        Log::info('OrderItem has no parent with qty_ordered', [
+                        Log::info('OrderItem has no parent with `qty_ordered`', [
                             'orderItem' => $item,
-                            'parent' => $item->parent,
-                            'product' => $item->product
+                            'parent'    => $item->parent,
+                            'product'   => $item->product,
                         ]);
                         $qty = 1;
                     }
@@ -154,26 +158,14 @@ class OrderItemRepository extends Repository
     }
 
     /**
-     * Returns qty to product inventory after order cancelation
+     * Returns qty to product inventory after order cancellation.
      *
      * @param  \Webkul\Sales\Contracts\OrderItem  $orderItem
      * @return void
      */
     public function returnQtyToProductInventory($orderItem)
     {
-        $orderedInventory = $orderItem->product->ordered_inventories()
-                                      ->where('channel_id', $orderItem->order->channel->id)
-                                      ->first();
-
-        if (! $orderedInventory) {
-            return;
-        }
-
-        if (($qty = $orderedInventory->qty - ($orderItem->qty_ordered ? $orderItem->qty_to_cancel : $orderItem->parent->qty_ordered)) < 0) {
-            $qty = 0;
-        }
-
-        $orderedInventory->update(['qty' => $qty]);
+        $this->updateProductOrderedInventories($orderItem);
 
         if ($orderItem->getTypeInstance()->isStockable()) {
             $shipmentItems = $orderItem->parent ? $orderItem->parent->shipment_items : $orderItem->shipment_items;
@@ -182,20 +174,55 @@ class OrderItemRepository extends Repository
                 foreach ($shipmentItems as $shipmentItem) {
                     if ($orderItem->parent) {
                         $shippedQty = $orderItem->qty_ordered
-                                      ? ($orderItem->qty_ordered / $orderItem->parent->qty_ordered) * $shipmentItem->qty
-                                      : $orderItem->parent->qty_ordered;
+                            ? ($orderItem->qty_ordered / $orderItem->parent->qty_ordered) * $shipmentItem->qty
+                            : $orderItem->parent->qty_ordered;
                     } else {
                         $shippedQty = $shipmentItem->qty;
                     }
-    
+
                     $inventory = $orderItem->product->inventories()
-                    //  ->where('vendor_id', $data['vendor_id'])
-                     ->where('inventory_source_id', $shipmentItem->shipment->inventory_source_id)
-                     ->first();
-    
-                    $inventory->update(['qty' => $inventory->qty + $shippedQty]);                  
+                        ->where('inventory_source_id', $shipmentItem->shipment->inventory_source_id)
+                        ->first();
+
+                    $inventory->update(['qty' => $inventory->qty + $shippedQty]);
                 }
             }
         }
     }
-}
\ No newline at end of file
+
+    /**
+     * Update product ordered quantity.
+     *
+     * @param  \Webkul\Sales\Contracts\OrderItem  $orderItem
+     * @return void
+     */
+    public function updateProductOrderedInventories($orderItem)
+    {
+        $orderedInventory = $orderItem->product->ordered_inventories()
+            ->where('channel_id', $orderItem->order->channel->id)
+            ->first();
+
+        if (! $orderedInventory) {
+            return;
+        }
+
+        $qty = (
+            $orderedInventory->qty +
+            (
+                isset($orderItem->qty_shipped)
+                    ? $orderItem->qty_shipped
+                    : $orderItem->parent->qty_shipped
+            )
+        ) - (
+            isset($orderItem->qty_ordered)
+                ? $orderItem->qty_ordered
+                : $orderItem->parent->qty_ordered
+        );
+
+        if ($qty < 0) {
+            $qty = 0;
+        }
+
+        $orderedInventory->update(['qty' => $qty]);
+    }
+}
diff --git a/tests/unit/Sales/Order/OrderItemRepositoryCest.php b/tests/unit/Sales/Order/OrderItemRepositoryCest.php
new file mode 100644
index 000000000..d257c865c
--- /dev/null
+++ b/tests/unit/Sales/Order/OrderItemRepositoryCest.php
@@ -0,0 +1,80 @@
+<?php
+
+namespace Tests\Unit\Sales\Order;
+
+use Helper\Bagisto;
+use UnitTester;
+use Webkul\Product\Models\ProductOrderedInventory;
+use Webkul\Sales\Models\OrderItem;
+use Webkul\Sales\Repositories\OrderItemRepository;
+
+class OrderItemRepositoryCest
+{
+    /**
+     * Order item repository.
+     *
+     * @var Webkul\Sales\Repositories\OrderItemRepository
+     */
+    private $repository;
+
+    public function _before()
+    {
+        $reflection = new \ReflectionClass(OrderItemRepository::class);
+
+        $property = $reflection->getProperty('model');
+        $property->setAccessible(true);
+
+        $this->repository = $reflection->newInstanceWithoutConstructor();
+    }
+
+    public function testUpdateProductOrderedInventories(UnitTester $I)
+    {
+        /**
+         * Having 10 quantity in inventory.
+         */
+        $product = $I->haveProduct(Bagisto::SIMPLE_PRODUCT, [
+            'productInventory' => ['qty' => 10],
+        ]);
+
+        /**
+         * 2 quantities are on hold.
+         */
+        $productOrderedInventory = $I->have(ProductOrderedInventory::class, [
+            'product_id' => $product->id,
+            'qty'        => 2,
+        ]);
+
+        /**
+         * 5 quantities are shipped.
+         */
+        $orderItem1 = $I->have(OrderItem::class, [
+            'product_id'  => $product->id,
+            'qty_ordered' => 5,
+            'qty_shipped' => 5,
+        ]);
+
+        /**
+         * 2 quantities are in queue.
+         */
+        $orderItem2 = $I->have(OrderItem::class, [
+            'product_id'  => $product->id,
+            'qty_ordered' => 2,
+            'qty_shipped' => 0,
+        ]);
+
+        /**
+         * Now testing the repository method with shipped one cancelled.
+         */
+        $this->repository->updateProductOrderedInventories($orderItem1);
+        $productOrderedInventory->refresh();
+        $I->assertNotEquals(0, $productOrderedInventory->qty);
+        $I->assertEquals(2, $productOrderedInventory->qty);
+
+        /**
+         * Now testing the repository method with pending one cancelled.
+         */
+        $this->repository->updateProductOrderedInventories($orderItem2);
+        $productOrderedInventory->refresh();
+        $I->assertEquals(0, $productOrderedInventory->qty);
+    }
+}