In this paper, an optimization approach based on an arithmetic optimization algorithm (AOA) is proposed for specifying the optimal allocation of distribution generations/generators (DGs) and capacitor banks (CBs) in radial distribution systems. The AOA is a new population-based meta-heuristic algorithm that is essentially based on using basic arithmetic operators in mathematics. The proposed approach is employed to specify the optimum placement, capacity, and power factor of DGs and CBs to decrease the distribution systems’ total power loss and voltage deviation. To state the performance of the proposed approach, DGs and CBs are placed in IEEE 33-bus and 69-bus systems separately or together. When only DGs are used and the parameters of location, capacity, and power factor of DGs are determined simultaneously, the total active power loss reductions in the IEEE 33-bus and 69-bus systems are achieved at 94.42% and 98.03%, respectively. When the results of other optimization algorithms are examined, it is seen that better results are obtained with AOA.