Hi there,
I tested by creating adding an item to an on-hold order on my site and stock is reduced as expected, so I can’t replicate this issue.
This might likely cause by a conflict on your site that prevents stock from reducing properly. To test, please follow the steps below:
The best way to determine if the issue is being caused by a theme and/or plugin is to temporarily switch your theme to Storefront (https://woocommerce.com/products/storefront/?aff=10486&cid=1131038) and disable all plugins except for WooCommerce. Finally, test to see if the issue is resolved by stock reduced when an item is added to the order.
To figure out which plugin is causing the problem, continue to the next step – reactivate your other plugins one by one, testing after each, until you find the one causing conflict.
Here’s a more extensive explanation in our docs: https://docs.woocommerce.com/document/how-to-test-for-conflicts/
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Tools to help you troubleshoot:
Meks Quick Plugin Disabler is a plugin you can install which will remember what plugins you currently have active so it’s easy to switch them back on. Link: https://www.ads-software.com/plugins/meks-quick-plugin-disabler/
You can clone your site to a staging environment and perform tests without modifying your live site or impacting customers. Many hosts provide staging facilities, so it’s worth checking in with them. It’s also possible to do it using the free WP Staging plugin. Link: https://www.ads-software.com/plugins/wp-staging/