Listing Mirror has the capability to cancel eBay orders! So when you need to cancel an eBay order, do so within Listing Mirror. Canceling an order directly on the marketplace will cause LM to add the QTY from that order back to inventory. When you cancel an eBay order direct in LM, the QTY for that order will NOT be added back to inventory.
Go to the Order Details page for the order you need to cancel.
Select Cancel order on market from the Action drop-down menu.
And that's all there is to it! Listing Mirror will send out the cancel to the marketplace. If you need to add the QTY from that order back to inventory, then you would do that now!