Track an item individually when its identity matters: when it has a serial number, its own service history, or a condition that differs from its siblings. Vehicles, camera bodies, generators and power tools all qualify.
Track by quantity when the units are interchangeable and nobody cares which one they get. Chairs, tables, cables, safety helmets. Nobody has ever asked for chair number 147.
The mistake to avoid is modelling 500 chairs as 500 individual units. Availability checks slow to a crawl, reports become unreadable, and you gain nothing — because you were never going to track chair 147's history anyway.