The IBM Power System VIOS supports optical devices for the client using repositories with iso images which then can be loaded to the VIO client. This is a nice feature especially if you are working on a remote system as you don't have to put int DVD into the drive. This optical drive can also be used for taking backups.

First step is to create a repository. As the hdisk where the rootvg is loaded should have a lot of free space with this is the recommended location if you only need a few images. In case you are working with many different AIX or Linux versions you might consider using one or more separate disks.
This will create a 20GB repository (which is a new logical volume called VMLibrary_LV in the rootvg)

mkrep -sp rootvg -size 20G

To create a new optical disc from an AIX V6 DVD you either need to put the DVD in the drive (only this time) and run

mkvopt -name AIX6_DVD1 -dev cd0 -ro

or create an ISO image locally from DVD named aix6_dvd1.iso, transfer it to the VIOS (not into the repository) and run

mkvopt -name AIX6_DVD1 -file /tmp/aix6_dvd1.iso -ro

Now you need to create a FBO target (file-backed optical device) and attach it to the

mkvdev -fbo -vadapter vhost#

where vhost# is the virtual scsi device for the VIO client (check with lsmap -all). This will create vtopt#.
Finally you need to load the DVD image tinto the drive:

loadopt -disk AIX6_DVD1 -vtd vtopt#

In case you want to do an install just start the LPAR and you will find the DVD device in SMS just as a standard DVD drive. If the LPAR is up and running you need to run

cfgmgr

to make the drive available.
Check with

lsdev -Cc cdrom

if the drive is there.
If you need to change DVD images just unload the currently loaded image with

unloadopt -vtd vtopt#

and load the next one.

You can also create an empty optical device medium file which than can be used as an writable optical disc:

mkvopt -name Backup_DVD -size 10G