CPIM Practice Exam

Which category of a supplier agreement deals with allowable defects and specifications?

1. Price

2. Term

3. Quality

4. Quantity

The correct answer is: Quality

The category of a supplier agreement that deals with allowable defects and specifications is quality. Quality terms in a supplier agreement set the standards and expectations for the product or service, including details such as acceptable levels of defects, product specifications, quality assurance processes, and compliance with industry standards. These terms ensure that both parties are aligned on what constitutes a satisfactory product, preventing disputes over quality and thereby ensuring a level of consistency in what the supplier delivers. While price refers to the financial aspect of the agreement, term outlines the duration or timeline of the contract. Quantity deals with the amount of goods or services to be provided. None of these categories specifically address the parameters for product quality, which includes allowable defects and specifications, making quality the correct choice in this scenario.