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Documentation Index

Fetch the complete documentation index at: https://mintlify.com/shubhamsingh-pg/rto-profit-simulator/llms.txt

Use this file to discover all available pages before exploring further.

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Overview

The RTO Profit Simulator uses two primary calculation functions to analyze financial impact and simulate savings scenarios. All calculations are implemented in src/utils/calculations.js.

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calculateMetrics()

Calculates comprehensive financial metrics based on business inputs.

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Function Signature

calculateMetrics(data, isAnnual = false)
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data
object
required
Business input data containing:
  • monthlyOrders (number): Total orders per month
  • averageOrderValue (number): Average order value in INR
  • codPercentage (number): Percentage of COD orders (0-100)
  • rtoPercentage (number): Percentage of RTO orders (0-100)
  • forwardShippingCost (number): Forward shipping cost per order
  • returnShippingCost (number): Return shipping cost per RTO
  • productCost (number): Product cost per order
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isAnnual
boolean
default:"false"
Whether to calculate annual projections (multiplies monthly values by 12)

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Return Values

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totalRevenue
number
Total revenue if all orders were successfulFormula: monthlyOrders × averageOrderValue × multiplierWhere multiplier is 12 for annual view, 1 for monthly view.
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codOrders
number
Number of Cash on Delivery ordersFormula: Math.round(monthlyOrders × (codPercentage / 100)) × multiplier
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rtoOrders
number
Number of Return to Origin ordersFormula: Math.round(codOrders × (rtoPercentage / 100)) × multiplier
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totalRtoLoss
number
Total financial loss due to RTO ordersFormula: rtoOrders × (forwardShippingCost + returnShippingCost + productCost) × multiplierThis represents the complete loss per RTO order including:
  • Forward shipping costs (already spent)
  • Return shipping costs (recovery expense)
  • Product cost (inventory blocked or lost)
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netRealizedRevenue
number
Actual revenue realized from delivered ordersFormula: (prepaidOrders + deliveredCodOrders) × averageOrderValue × multiplierWhere:
  • prepaidOrders = monthlyOrders - codOrders
  • deliveredCodOrders = codOrders - rtoOrders
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netProfitAfterRto
number
Net profit after accounting for RTO lossesFormula: netRealizedRevenue - totalRtoLoss
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breakEvenRtoPercentage
number
Maximum sustainable RTO percentage before losses exceed profitsFormula: (profitPerSuccessfulOrder / (profitPerSuccessfulOrder + lossPerRtoOrder)) × 100Where:
  • profitPerSuccessfulOrder = averageOrderValue - productCost - forwardShippingCost
  • lossPerRtoOrder = productCost + forwardShippingCost + returnShippingCost

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Calculation Steps

The function performs calculations in the following order:
  1. Order Distribution 
    const codOrders = Math.round(monthlyOrders * (codPercentage / 100))
const prepaidOrders = monthlyOrders - codOrders
  2. RTO Impact 
    const rtoOrders = Math.round(codOrders * (rtoPercentage / 100))
const deliveredCodOrders = codOrders - rtoOrders
  3. Loss Calculation 
    const rtoLossPerOrder = forwardShippingCost + returnShippingCost + productCost
const totalRtoLoss = rtoOrders * rtoLossPerOrder
  4. Revenue Realization 
    const netRealizedRevenue = (prepaidOrders + deliveredCodOrders) * averageOrderValue
  5. Profit Calculation 
    const netProfitAfterRto = netRealizedRevenue - totalRtoLoss
  6. Break-Even Analysis 
    const profitPerSuccessfulOrder = averageOrderValue - productCost - forwardShippingCost
const lossPerRtoOrder = productCost + forwardShippingCost + returnShippingCost
const breakEvenRtoPercentage = (profitPerSuccessfulOrder / (profitPerSuccessfulOrder + lossPerRtoOrder)) * 100

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Example Calculation

Given the default business inputs: 
const data = {
  monthlyOrders: 10000,
  averageOrderValue: 1500,
  codPercentage: 60,
  rtoPercentage: 30,
  forwardShippingCost: 60,
  returnShippingCost: 60,
  productCost: 500
}

const metrics = calculateMetrics(data, false)
Step-by-step calculation:
  1. Total Revenue: 10,000 × 1,500 = ₹15,000,000
  2. COD Orders: 10,000 × 0.60 = 6,000
  3. Prepaid Orders: 10,000 - 6,000 = 4,000
  4. RTO Orders: 6,000 × 0.30 = 1,800
  5. Delivered COD Orders: 6,000 - 1,800 = 4,200
  6. RTO Loss per Order: 60 + 60 + 500 = ₹620
  7. Total RTO Loss: 1,800 × 620 = ₹1,116,000
  8. Net Realized Revenue: (4,000 + 4,200) × 1,500 = ₹12,300,000
  9. Net Profit: 12,300,000 - 1,116,000 = ₹11,184,000
  10. Profit per Success: 1,500 - 500 - 60 = ₹940
  11. Loss per RTO: 500 + 60 + 60 = ₹620
  12. Break-Even RTO%: (940 / (940 + 620)) × 100 = 60.3%

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calculateSavings()

Calculates potential savings from reducing RTO percentage.

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Function Signature

calculateSavings(data, reductionPercent, isAnnual = false)
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data
object
required
Same business input data structure as calculateMetrics()
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reductionPercent
number
required
Absolute percentage points to reduce RTO by (e.g., 5 reduces 30% to 25%)
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isAnnual
boolean
default:"false"
Whether to calculate annual projections

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Return Values

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savedOrders
number
Number of orders saved from RTOFormula: originalRtoOrders - newRtoOrders
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profitImprovement
number
Additional profit gained from RTO reductionFormula: newNetProfit - originalNetProfit

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Implementation Logic

The function uses absolute reduction (not relative): 
const newRtoPercentage = Math.max(0, data.rtoPercentage - reductionPercent)

const originalMetrics = calculateMetrics(data, isAnnual)
const newMetrics = calculateMetrics({ ...data, rtoPercentage: newRtoPercentage }, isAnnual)

return {
  savedOrders: originalMetrics.rtoOrders - newMetrics.rtoOrders,
  profitImprovement: newMetrics.netProfitAfterRto - originalMetrics.netProfitAfterRto
}

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Example Usage

Scenario: Reduce RTO from 30% to 25% (5% reduction) 
const savings = calculateSavings(data, 5, false)
// savedOrders: 300 orders
// profitImprovement: ₹186,000
Calculation breakdown:
  • Original RTO orders: 1,800
  • New RTO orders (25%): 1,500
  • Orders saved: 300
  • Each saved order prevents ₹620 loss
  • Profit improvement: 300 × 620 = ₹186,000

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Break-Even RTO Formula Explained

The break-even RTO percentage is the critical threshold where your business neither makes nor loses money.

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Mathematical Derivation

Let:
  • P = Profit per successful delivery
  • L = Loss per RTO order
  • R = RTO percentage (break-even point)
  • C = Number of COD orders
At break-even: 
Total Profit = Total Loss
C × (1 - R) × P = C × R × L
(1 - R) × P = R × L
P - R×P = R×L
P = R×P + R×L
P = R(P + L)
R = P / (P + L)
As a percentage: 
Break-Even RTO% = [P / (P + L)] × 100

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Practical Interpretation

If your current RTO% > Break-Even RTO%:
  • You’re losing more money on RTOs than making on deliveries
  • Every additional RTO pushes you into net loss
  • Immediate intervention required
If your current RTO% < Break-Even RTO%:
  • Your business is still profitable despite RTOs
  • You have buffer room for growth
  • Focus on optimization to increase margins

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Example

With default values:
  • Profit per delivery: ₹940
  • Loss per RTO: ₹620
  • Break-even: 940 / (940 + 620) = 0.603 = 60.3%
This means:
  • At 60.3% RTO rate, you break even
  • At 30% RTO (current), you’re still profitable
  • You have ~30% buffer before critical losses

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Usage in Application

The calculations are used throughout the application: In App.jsx: 
import { calculateMetrics } from './utils/calculations'

const metrics = calculateMetrics(data, isAnnual)
In SimulationSection.jsx: 
import { calculateSavings } from '../utils/calculations'

const currentSavings = calculateSavings(data, sliderValue, isAnnual)
In VisualAnalytics.jsx: 
const projectedMetrics = calculateMetrics(reducedData)
All components receive either data (user inputs) or metrics (calculated outputs) as props to display financial insights.

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