Level I
Has this supplier passed most previous inspections? Do you feel confident in their products quality? Instead of doing no quality control, buyers can check less samples by opting for a level-I inspection.
However, settling on this level by default, in order to spend less time/money on inspections, is very risky. The likelihood of finding quality problems is lower than generally recommended.
Level II
It is the most widely used inspection level, to be used by default.
Level III
If a supplier recently had quality problems, this level is appropriate. More samples are inspected, and a batch of products will (most probably) be rejected if it is below the quality criteria defined by the buyer.
Some buyers prefer level-III inspections for high-value products. It can also be interesting for small quantities, where the inspection would take only one day whatever the level chosen.