Operations Math – Simple Math for Smarter Logistics

If you run a warehouse or manage a fleet, you deal with numbers every day. From figuring out how many pallets fit in a rack to calculating the cost of a delivery route, operations math is the engine that keeps everything moving smoothly. The good news? You don’t need a PhD to use it. A handful of basic formulas can turn guesswork into clear decisions.

Let’s start with the biggest headache for most logistics managers: delivery cost per mile. Take the total miles you drive in a month, add fuel, driver pay, and vehicle wear, then divide by the number of miles. The result tells you how much each mile really costs. Knowing this number helps you price services competitively and spot routes that drain profit.

Key Metrics You Should Know

1. Cost per Mile – (Fuel + Driver Pay + Maintenance) ÷ Total Miles. Use this to compare different trucks or outsource options.

2. Inventory Turnover – Cost of Goods Sold ÷ Average Inventory Value. High turnover means you’re moving stock quickly, which frees up cash.

3. Economic Order Quantity (EOQ) – √(2DS ÷ H). D is annual demand, S is ordering cost, H is holding cost per unit. EOQ tells you the optimal order size to minimize total cost.

4. Lead Time – Time from order placement to delivery. Shortening lead time cuts safety stock and reduces storage costs.

5. Load Factor – Actual load ÷ Vehicle capacity. A low load factor means you’re under‑utilizing space, raising per‑item cost.

Practical Tips to Use Operations Math Today

Start with one metric that hurts your bottom line the most. If you’re losing money on long hauls, pull the cost‑per‑mile data from your recent trips. Plug in fuel receipts, driver wages, and maintenance invoices. You’ll likely see a few routes that are way above average. Consider consolidating shipments or switching to a larger vehicle for those runs.

Next, look at inventory turnover. Grab the last year’s sales and the average stock value from your WMS. If turnover is low, you might be holding too much dead stock. Use the EOQ formula to figure out a smarter order size and reduce holding costs.

Don’t forget to track lead time for each supplier. A simple spreadsheet can capture order date, shipment date, and receipt date. Spotting a supplier that consistently drags can prompt a renegotiation or a switch to a faster partner.

Finally, check your load factor. Load planning software can help, but even a quick manual check works. If you’re only filling 60% of your truck, you’re paying extra for empty space. Re‑route or combine orders to hit 80‑90% capacity.

Operations math isn’t a one‑time project; it’s a habit. Set a weekly 15‑minute review, update your numbers, and adjust routes or orders as needed. The more you use these simple formulas, the clearer the picture becomes, and the easier it is to make the right moves.

Ready to level up? Start by picking the metric that matters most for you, pull the data, run the calculation, and take one small action. Soon you’ll see cost savings, faster deliveries, and happier customers—all thanks to a bit of everyday math.