Example Case :
The pallets used by a company can contain 12 boxes.
You need to create a unit of conversion for the boxes.
You need to create a unit of measure for the pallet and another unit of measure for the box (if they don’t already exist). Then you create a unit conversion.
Create a unit of measure for pallet and box:
1. Go to Navigation pane > Modules > Product information management > Released product maintenance. (Organization administration > Setup > Units > Units.)

2. Click Units.

3. Click New.
4. In the Unit field, type a value. Enter the ID or symbol to use when referring to the unit of measure.
5. In the Description field, type a value such as Pallet. Enter a descriptive name for the unit of measure in the system language.
6. In the Unit class field, select Quantity
7. In the Decimal precision field, enter a number. Specify the number of decimals that the converted unit of measure must be rounded to when a calculation is completed for the unit of measure.
8. Click Save.

9. Repeat the above steps for Box.

Define unit conversion rules
1. On the Action Pane, click Unit conversions.

Define rules for converting the unit of measure to and from other units of measure in the selected unit class.
2. Click New to open the drop dialog.
3. In the Factor field, enter 12. Conversion factor between the From unit (Pallet) and the To unit (Box).
4. In the To unit field, select Box.
5. In the Rounding field, select To nearest.
6. Click OK.
7. Close the page.

Reference:
https://docs.microsoft.com/en-us/dynamics365/supply-chain/pim/tasks/manage-unit-measure