The aim of this paper is to show, by use of a complete and exact mathematical model, that the centroid method is a widely misunderstood method in facility location problems and that it is, in fact, normally an inappropriate method to use for such problems. While numerous sources do describe the procedure as minimizing the total shipping cost when transportation costs are linearly proportional to the distances of travel, this study shows that these statements are not valid. The misunderstanding regarding what the centroid method actually does results from an improper interpretation of the notion of the center of gravity. In fact, the centroid method minimizes shipping costs only if transportation costs are proportional to the squares of distances traveled.