WHERE : BOM / Inventory / Production Shops
Navigate to BOM / Inventory / Production Shops.
You can turn INVENTORY ITEMS into different INVENTORY ITEMS in your PRODUCTION SHOP.
So you might buy into stock INVENTORY ITEMS called EGGS, FLOUR and BUTTER by entering SUPPLIER INVOICES. This will update the COST and STOCK ON HAND. You can then use your PRODUCTION SHOP to turn them into SPONGE CAKE ( with an associated COST & QTY ) and transfer to another STOCK LOCATION or sell them.
Each PRODUCTION SHOP should be called something that makes sense to you and be linked to an INVENTORY LOCATION.
More on this in PRODUCTION RUNS.