In a flock of breeding ewes of fixed size, the number of age groups of rams and ewes influences the annual rate of genetic gain in any character under selection. The number of ewe age groups also influences the number of surplus stock aged 11/2 years, and the number cast for age, as well as the amount and quality of wool obtained. The latter is also influenced by the proportion of ewes which rear no lambs, one, or two, as well as the proportion themselves born in multiple births or as the progeny of young ewes. In this paper, all these influences are considered in determining the age structure of the breeding flock which gives the greatest number of surplus stock and the greatest relative wool return. To combine the two, relative weights have to be given to wool and surplus stock. One such set of weights has been used, and the conclusion has been drawn that two age groups of rams, with either five or six age groups of ewes, give optimal return, the number of ewe groups depending on the level of reproduction rate. This conclusion depends on the relative weights used. In cases where numbers of animals are of supreme importance, such as after a drought or at a time of increasing pasture improvement, then retaining ewes to an older age would increase the number of surplus young stock. © 1968 CSIRO. All rights reserved.