This research examines the effects of the North American Free Trade Agreement (NAFTA) from the perspective of a hypothetical firm operating in the household appliance industry. The location of the lowest cost source of components and the effects on the total systems cost to manufacture and distribute finished products are examined under different levels of economic integration. The research utilizes a network simulation to model optimum supplier sources, purchased item flows, and associated costs to meet total North American demand. The study's results, while highly dependent on the data utilized, indicate that the NAFTA could result in significant changes in supply location and total systems cost for firms with integrated North American operations.
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