To Add / Edit / Delete Item Categories
Taken from FA v2.2.7
Items and Inventory -> Item Categories
Tips and Tricks
Item Categories help you group the items you buy and sell. You can define your own Item Categories, nominating default ledger accounts, tax type and units of measure. Item Types are fixed and can be one of Manufactured, Purchased or Service. Manufactured and Purchased are Stock Items, meaning you can use Manufacturing and inventory control functionality for the item. Service items are not subject to manufacturing or inventory control.
If you want to create a manufactured Item you would have to set it to Manufactured. Then you can populate the Manufactured Item in Bill of Material.