[otrs] How do I setup sub-types (hierarchical types) to categorize tickets?

I have read a few posts here, one suggesting that types are hierarchical. All I see is one type drop-down field on a ticket being submitted so I would like to know if you can have a sub-type and how to set that up. I looked into Services, but it looks like you configure customers to services, which doesn’t necessarily meet my requirements. I am sure that there is something I am missing here and I am hoping someone has a concise answer for this. So far, I have to say, this seems to be a great product and I would like to be able to use it. Thank you