Categorizing Inventory Items

 

I would like to know how I can categorize items in my inventory? For example, i have motor oils of different types and I would like to categorize into a few main product groups such as Fleet Lubes, Gear Oils, Hydraulic Oils, etc...and all the products would be added to one of these categories.

The reason for this is that I would like to have sales reports based not only on items but also on product groups (categories).

So i guess how do I make the categories and put products into them?

Thank you