CPIM Practice Exam

What should a supplier agreement specify regarding the purchase of natural products?

1. Allowable variation in quantity

2. Exact quantity per order

3. Exact delivery dates

4. Discounts if paying late

The correct answer is: Allowable variation in quantity

A supplier agreement should specify allowable variation in quantity because natural products often exhibit inherent variability due to factors such as seasonal changes, agricultural practices, or natural fluctuations in supply. Allowing for a permissible range accommodates these variations while still meeting the buyer's needs. This approach helps both parties manage expectations and reduces the risk of disputes arising from slight deviations in quantity that are often unavoidable in natural product sourcing. While specifying an exact quantity per order may seem appealing for clarity, it does not account for the variability inherent in natural products. Exact delivery dates can also be difficult to commit to due to transportation or production delays related to agricultural practices. Discounts for late payments, although important in a financial context, do not directly relate to the specifications of the product itself and are less critical in defining the terms of quality and supply agreement specific to natural products.