Create Digital Terrain Model

Digital terrain model is a digital model or 3D representation of a terrain's surface — commonly for a planet (including Earth), moon, or asteroid — created from terrain elevation data.

Step 1 ,
Right click on feature dataset --- New --- Terrain 

Step 2 - 

add your terrain shape file 

Step 3-

Next

Step 4-

Provide necessary information as required 

Step 5 - 

Select Pyramid Properties --- Next                                                                                                                                                      

Step 6-

Next

    Step 7 -

Terrain model is created, now we have to convert Terrain to TIN

Step 8 - 

Arc Toolbox - 3D Analyst Tools - Conversions - From Terrain - Terrain to TIN

Step 9-

Select your terrain model as Input Terrain

Step 10-

Digital TIN model created, but you have to open from ArcScene to see the TIN model

Step 11 -