After a bit more testing it might be a little better to use heavy fire until you have their whole force near you, throw all three grenades, then retreat and only use suppressive fire until they start throwing grenades, then retreat the last time, suppressive until they throw grenades then heavy until win. With that strategy I lost 50 of 200 soldiers.
Also, it seems that the weapons percentage does affect the numbers, testing with 200 soldiers at 100% equipment you can kill 22 enemies per turn with suppressive fire, which was more than they would reinforce each turn. That's probably why others with larger armies were having no trouble with this.
thanks, I was able to clear my first battle a bit after reading this. I had around 30 or 40 soldiers. I find that having everyone geared (weapon %) and experience helps a lot, but when you're starting, the experience part is a bit difficult. What I did the first time was to use heavy fire until there was a huge group, and then I used grenade. Fortunately, I was able to get over 60 nearby before first grenade. Since you get 3 grenades and 2 covers, you have to use grenade twice in one of the fights, and then cover. So, I grenade and cover, and then use heavy fire to get as many nearby as I can again, and then grenade and get to final cover, and then it's just a shootout. If you managed to retain enough soldiers, you'll win. When your soldier count is so low, even if they grenade, it won't do much to you.
Second time, I had more troops, like around 45, and I had near max exp and weapons. It's heavy fire to get nearly the whole group out in the first location, followed by 3 grenades, and that has the best effect if you have enough power to get to that point, followed by cover, and then just shootout with suppressive. If you've taken out enough, they may not even be able to grenade anymore.
And now, I've got 80+ troops with maxed weapons, and just suppressive fire takes them out enough that I barely even need to grenade, and I lost only 3 troops.