We are having problems with this functionality.
For example we have a category that looks as follows;
Handsets; iPhone; iPhone 5S

I have tried a hundred times to add "iPhone 5S 16GB" under iPhone 5S but instead it ends up just deciding to go wherever it wants. I have tried many times to then drag it to the correct category but again it just goes right back where it was. I have sent emails to RS about this issue but have yet to get a resolution.

I agree with both Harvey and Rae. At our computer business, we currently define items we sell into departments (e.g. New Products, Used Products, Service, etc.), and categories. We then subdivide our categories into subcategories.
For example: Dept.=New (1); Category = Circuitboard/Motherboard. In this example, our item reference code that also prints on the product label is "1CBMOBO." At a minimum, we would need department and category.
When receiving inventory, we need fields for our purchase order #, vendor, vendor invoice number, vendor part number, and the option to serialize. We print labels at the the time of receipt.

I would like to see departments with categories and sub categories. For a computer store that means we could have a dept called motherboards and categories Intel and AMD and sub categories for Socket 1150, Socket 1155 etc.

this is a great idea. the inventory section of repairshopr needs a bit more development. although there is an item number it would be ideal to have upc as well.

a more robust vendor section would go hand in hand here. under vendor we need multiple contacts. lets say you have an entry for techdata, you might put your account number, portal logon and password, maybe your sales rep contact phone, and the number for licensing desk and server support etc..

finally receiving merchandise should include vendor, invoice number, vendor part number, item number and serialization if necessary, then an option to print labels at the the time of receipt.

just saying.its a bit lacking right now in its current form.