Video-on-demand is an interactive service that provides programs (movie, home shopping, etc.) to users connected to a network. This service will require high bandwidth network and video servers with a large amount of storage capacity. From the viewpoint of system analysis, there are optimization problems to be solved. In this paper, we present a dynamic programming method for allocating the storage for programs being served in a multi-level video-on-demand network. In the optimization of the network resource, we consider the three kinds of costs: installation cost for video servers, program storage cost, and transmission (or communication) cost. The factors related to the costs are investigated. An example is shown to illustrate the proposed method.