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How do I setup non-sellable inventory such as packaging material in Dynamics so value and item does not show in the normal inventory listing that is sellable?
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You can use different postong group or item category
Yes, As Amol suggested, You can setup a Item category code, Posting group code for these items and while running a report, you can give filter of category or posting group to exclude these items in it.
If you do not want these items should come on drop down of item in sales order then it is require to add above filter on TableRelation property of "No." field in Sales line table (37).
Let me know if you need any other information.
Regards,
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