The real wordsTheory
The assumption underneath it
The slide states it plainly: the method assumes cost is directly proportional to distance and to volume shipped.
So no minimum freight charge, no rate that falls with distance, no difference between a road and a river. If any of those matter, the answer is a starting point rather than a site.
The other limitation is practical: the centre of gravity can land in a lake, on a mountain or inside somebody else's factory. Treat the point as the centre of a search area.