A management model is developed to determine optimal mater allocation policies for hydraulically connected time-variant surface and ground water supplies in a hypothetical system. The system involves a multipurpose reservoir, a hydraulically connected stream and aquifer, agricultural plots, water supply and observation wells, and an artificial recharge zone. The model minimizes deviations from a set of rule curves defined for storage in the reservoir and along the stream course, so as to consider possibilities for storage of excess water in wet periods and its distribution in subsequent dry periods. The hypothetical system is divided into components which are subsequently integrated using numerically generated response functions that relate the systemis behavior to various system excitations. The management model is formulated and solved for monthly time steps, which include both dry and wet conditions, to determine reservoir release, pumpage rate from supply wells, artificial recharge rate, water diversion from reservoir and stream to the demand area, and storage both in the reservoir and along the stream course at an optimal level in each time step over a six-month planning horizon. Furthermore, sensitivity analysis of the management plan with respect to potential use of ground water supplies is performed to analyze the latter's impact on operating policies.