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If you wish to remove all order items from Install Base, you can chose the option to "EXPIRE" them. This is a better option. You may also consider doing a RMA order to bring the items back to inventory. Depending on your business scenario, you may wish to expire or rma back the IB items.
To get one service customer created one order in CRM system (say A) and this order is came down to our system(say B) and we send it further to another system(say c). we got ok response from system whome we send the order i.e. (C), so in our system (B)we close the order.
But unfortunately this order is failed in System C so we need to cancell this order. We cancelled the Order in system A but in our system(B) order is close so it is not possible to cancelled this order so we need to remove this item instance form install base.