Ship and cancel functionality in OM

 Hi, I need to setup/customise OM so that I can accept Ship and Cancel orders. The requirements are as follows:

The sales order is Pick Released. Any lines available are interfaced into Shipping, any that are not (i.e. no stock available) are placed on hold. The released line/s are processed and ship confirm is run. At the point of ship confirm, any lines or partial quantities from that order that are on hold are cancelled in the Shipping Trasactions and Sales Order forms. The reason the non-pick released lines/items are placed on hold and only cancelled when the order is ship confirmed, is that the order maybe back ordered. If this happens, all lines have to be pick released again