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This book elaborates some very important concepts, tools, and methodologies that can be used to help resolve multiple reservoir capacity allocation problems in a consistent, efficient, and cost-effective way. The material presented in the book will guide the hydrological analyst or design engineer in the determination of the optimal storage capacities and operational strategies of the individual elements in a system of reservoirs present at a set of potential dam sites. The specific goal in the type of optimization problem elaborated here will be to help minimize the reservoir capacities and/or shortfalls (which are a surrogate for minimizing costs) and still meet capacity requirements and needs. The ultimate objective in such an application will be to prevent over-design or under-design of reservoir storage capacities under optimum conditions of reservoir operation. Thus, the optimal solution will produce the smallest reservoir storage required to meet all project demands with an acceptable degree of reliability.