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Motion compensation with multiple reference pictures has been widely used during the development of the emerging High Efficiency Video Coding (HEVC) standard, which greatly helps to improve the coding efficiency. Usually, a heuristic strategy is exploited to use the nearest reconstructed pictures as references. However, such a strategy may not be efficient on all occasions, especially when different content characteristics and coding settings are considered. In this paper, we investigate how to manage reference pictures so as to achieve better rate-distortion performance under the memory constraint of the decoded picture buffer at the decoder. We formulate the reference picture management as an optimization problem and approximate its optimal solution. Moreover, we explore how to adjust quality for each picture according to the reference structure to further improve coding efficiency. For some coding cases, where a complicated encoder optimization is unaffordable, we also develop fast algorithms to get the most benefit from reference picture selection. Among them, one strategy has been adopted by the HEVC software and common test conditions to generate the anchor. Experimental results show that the proposed full search algorithm and fast search algorithms achieve significant bitrate reduction.