This paper deals with stochastic modelling of monthly inflows into a reservoir system in the monsoon climatic coditions using a multiplicative seasonal ARIMA model based on 25 years of data with logarithmic transformation. The developed model was applied to forecast the monthly inflows for 27 years. The comparison of these forecasted flows with the actual flows reveals that the ARIMA family models are adequate for longterm forecasting of inflows. The parameter uncertainity was also evaluated and found to be minimal thus avoiding the frequent updating of the model for forecasting. The use of the model in evolving optimal cropping patterns and optimal operational policies is also highlighted. © 1995 Kluwer Academic Publishers.