Processing Exchanges with Out of Stock items

When my client is processing exchanges, the system will allow her to add an item to the cart even if it is out of stock. The “continue to sell” box is not checked for that item, so not sure how/why it is allowing her to add an Out of Stock item.

Also, the item the customer is exchanging for is not being reserved from inventory once the exchange process starts. So in these cases, once the returned item is received, the exchange item has already been sold, even though that item should have been reserved for them when the exchange was initiated.

Can anyone provide any recommendations?

Do you have only 1 location where items may be stocked? Maybe there’s another location where the item is available?

Regarding reservations, is the fulfilment order for the exchange item on hold or released?