Well, it depends on how you intend to use the drop down list.
If you only have a "few" (less than 5 or 6) items in your list you can use a
formula like this:
Assume cell A1 contains the list.
=IF(A1="item1",value1,IF(A1="item2",value2,IF(A1="item3",value3,"")))
If your list contains "many" items then you need to create a 2 column table
like this:
........X...........Y
1..item1.....value1
2..item2.....value2
3..item3.....value3
etc
etc
Then you would use a formula like this:
=VLOOKUP(A1,X1:Y3,2,0)
However, since you allow users to manually enter items *not on the list* you
would need to account for that in whatever formula you decide to use.