The center of gravity model is a mathematical approach used to determine the optimal location for a facility, such as a warehouse or factory, based on the distribution of demand points. It aims to minimize transportation costs by finding a central point that reduces the distance to various locations, represented by their respective weights or demand levels. This model considers factors like the location of suppliers, customers, and the volume of goods transported. By analyzing these elements, businesses can make informed decisions about where to establish operations, ultimately improving efficiency and reducing costs in logistics and supply chain management.