Steps to describe how to create configurable product ?

1. In admin panel click on Catalog->Manage Products.

2. Click on Add Product button.

3. Select Attribute Set -> default and Product Type -> configurable Product.(From drop down box)

4. Tick the required attribute.. for example (color)

5. In General tab fill the mandatory details like Name, Description, Short Description, SKU, Weight, Status, Visibility.

(Note : Set Status enable to make to product visible)

6. Select the Price tab from the left side and fill mandatory details like Price and Tax Class.  
 
7. Select the Image tab from the left side and click on the browse file button to select the required images from the system. we can select multiple images at one time. then click on the Upload File button.

8. Select the inventory tab from the left side to set Stock Availability.

9. Select website tab from the left side and check on given website checkbox.

10. Select on the category tab on left side and select the required category from the category tree.

11. After Selecting required category, Click on Save and Continue Edit button.

12. Select on the Associated tab. After that fill the mandatory details under
Quick simple product creation tab on the right side.

mandatory details are:
1. Name
2. SKU
3. Weight
4. Status
5. Visibility (set to Not Visible Individually)
6. Color
7. Quantity
8. Stock Availability (set to in stock)

After fill all these details, click on Quick Create Button.

Same way in associated tab , you can create more simple product of different colors with different inventory..(Repeat step 12)