While creating a new product, I tried to enable serial number tracking, but the Serial Number option is not visible in the Track Inventory dropdown. Is there another setting required before this appears?
Yes, the Serial Number option will appear only after Manual Batch tracking is enabled in Inventory Preferences.
Serial Number tracking depends on Manual Batch. Once both options are enabled in Settings, the dropdown will show Serial Number.
That was the issue. After enabling Manual Batch first, the Serial Number option appeared.