Due to the restructuring in electricity market and environmental concerns penetration level of DG unit has been increased rapidly. It is also playing a significant role in minimization of line losses of a power system network. So it is very important to define the size and location of distributed generation unit to be allocated in a power system network. On the other hand due to radial distribution systems basic inherent features such as radial structure, a wide range of ⁄ ratios, and a large number of nodes; the optimal sizing and siting problem of a DG unit cannot be determined by the conventional techniques, which are used for transmission systems. A novel method for the estimation as well as minimization of losses in a radial distribution system with DG unit has been presented in this paper. It also improves the voltage profile of the existing power systems and in addition a combined and optimal power factor is also calculated. An algorithm is presented in this paper to obtain the optimum position of DG units in the distribution network based on the available amount of DG using Fuzzy logic. Forward backward sweep method makes the load flow solution faster. Test results on a 33-bus system reveal that the superiority and simplicity of the proposed algorithm.