Reservoir operation modeling and optimization are inevitable components of water resources planning and management. Determination of reservoir operating policy is a multi-stage decision-making problem characterized by uncertainty. Uncertainty in inflows and power demands lead to varying degrees of the working of a reservoir from one period to another. This transition, being ambiguous in nature, can be addressed in a fuzzy framework. The different working states of the reservoir are described as fuzzy states. Based on the degree of success in meeting the power demand and randomness associated with inflows, hydropower production is considered as a random fuzzy event. This paper examines the scope of profust reliability theory, a theory used in the reliability analysis of manufactured systems, in the performance optimization of a hydropower reservoir system. The operating policy derived from a profust reliability-based optimization model is compared with a simulation model. The model is then used to derive the optimal operation policy for a hypothetical reservoir fed by normally distributed inflow, for a period of five years. The results show that the model is useful in deriving optimal operating policies with improved reliabilities in hydropower production.