Delivery options can be found in the Location Details in the Company Record.
Allow Consolidated: This will allow you to have multiple sales orders on one despatch note rather than on multiple notes.
Single Despatch Require Back Orders: This option will not allow you to see items for despatch if items are on back order.
Single Despatch Ignore Back Orders: This option will allow you to create a despatch note for items regardless of whether items on the order have been placed on back order.
You also have the option to 'Despatch Full Orders Only' and 'Delivery Charges Apply?'