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Is it possible to set individual options out of stock (or disable in some way, we are not using inventory) ?

My client has different colours of their products and if one colour is out of stock there seems to be no way to set that out of stock other than actually deleting the option and putting it in afterwards.

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In short - no.

There is no baked-in functionality to accomplish this with the custom options on a product because Magento provides this facility in the form of Configurable Products. In short, this is how you decide when to use configurables vs. options:

  • If a product itself is being altered in some way, but there is only one tangible item that is sold (think custom engraving, embroidery), you may want to use custom options
  • If there are multiple sizes, colors; or otherwise multiple variants of a simliar nature of a product (think clothing color/size, fragrance bottle sizes, drum stick weights, guitar strings gauge, etc.) you want to use Configurable Products

Configurable products have actual simple products behind them in which you can enable, disable, set individual stock quantities and stock status. You may also set differing prices (e.g. $2.00 extra for an XL tshirt) on these simples that back up a configurable.

More information:

http://www.magentocommerce.com/knowledge-base/entry/difference-between-custom-variants-options-and-configurable-product-type

http://www.magentocommerce.com/knowledge-base/entry/tutorial-creating-a-configurable-product/

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