The purpose of this study is to improve the present methodology-for the estimation of optimal water supply from an impounding reservoir. The stochastic reservoir storage model presented in this paper is believed to be rational in that. the probability of reservoir depletion (return period) is to be calculated for the various monthly demands and storage capacities. The monthly flows are used to derive the reservoir storage capacity-monthly demand-probability curves at Dalcheon damsite and Hongcheon damsite in Han river basin.