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Hi Welcome to Oracle Forums :)
You can create a PO for a make item only if it is Outside Processing Enabled (line type will be OSP) else you cannot.
You can have purchase recommendations for the make item in MRP if you have a sourcing rule which says that BUY from XYZ vendor.
You can create a PO for any item as long as the "Purchased" and "Purchasable" flags are checked on the item master.
The item type classification (such as FG , Raw Material, Subassembly etc.) has no impact on the sourcing process.
A approved PO for FG WILL be considered by MRP as a valid supply and it will be taken into consideration when creating planned orders.
Hope this answers your question,
Thank you Sandeep for correcting the point 1.
Actually you cannot create orders other than OSP if the item is OSP enabled. So it is the reverse of my statement in the first reply.
For the point 2, the recommendation type i.e a P.O or a Discrete jobs is dependent on the sourcing rule but not the item definition of make/buy.
And like the Sandeep said the recommendation Qty is calculated taking everything into consideration.
Following are the steps you would need -
1. Set Item as a Buy instead of make. (if item is a make item , it follows a different workflow and will not result in auotmatic po creation) just for purchasing org.
2. Purchased and purchasable flags are set to yes
3. Sourcing rule is defined
When you progress SO it will automatically create requisition( create supply stage) , you can than auto create PO.