There are a few things that need to be done in order to see the "Create Batch" option appear on a material:

1.The Manufacturer Lot info module must be enabled.

2. The user must have Create Batch and Receive permissions.

3. Create Batch is only available on a material from an internal supplier. If Internal is defined as "Yes" on the Vendor tab of the supplier, it is an internal supplier. This does not affect what materials you can dispense into a batch, a batch can still compose of material sourced from internal or external suppliers