Supplier level value will be override the value at Purchasing Options.
But why at two levels we define same information?
This is the behavior of defaulting feature in EBS modules like Purchasing, Financials,etc.
Not only at Supplier level, Match approval level default can even be set at Line Type or Item level.
The level order for 'Match approval level' is 1)Purchasing Options, 2)Supplier, 3)Line Type and 4)Item.
Purchasing will give highest precedence to value at 4)Item and then to 3)Line Type and so on.
Suppose that we are setting Two-way at purchasing options and Three-way at Supplier A.
For this case, when PO is created Two-way would be defaulted. Next when we add Supplier A to it, Three-way would be defaulted.
You can set the defaults based on seeded logic and how it would help you business case.
For more information, you can refer Purchase Order Defaulting Rules in Purchasing User's Guide.