We can release inventory only for those orders which are not invoiced yet, that is, its shipment status is “created”.
On the path: Orders > Orders or Fulfillment> Shipment> New , Search for the Sale Order from which you have to release inventory.
On the Order details page, check if the order item is fulfillable, since this action is allowed only for fulfillable order items. As soon as you click the action icon, you can select the option to “Release Inventory”.
As soon as you release inventory, the respective order item status is reset to “Unfulfillable”.