This paper presents optimum policy of water supply distribution of the Osaka Prefecural Waterworks System located in the midwest of Japanese Islands. Owing to the ever increasing demand for water, the Osaka Prefectural Government endeavors to expand potable and industrial water distribution system to satisfy the growing water demand of the constituents under its jurisdiction. In this regard, the paper discusses a problem of establishing an efficient and effective water distribution system. The criteria to be considered are stability of water level at the reservoirs, stability of flow in the network, and the water treatment and distribution cost. These objective functions may be combined to form a multiple objective optimization problem or may be used independently and formulated into single objective optimization problems.