The parasitoid wasp Cephalonomia tarsalis (Ashmead) (Hymenoptera: Bethylidae) is commonly present in stored product facilities. While beneficial, it does not provide a high degree of biological pest control against its host, the saw-toothed beetle Oryzaephilus surinamensis (L.) (Coleoptera: Silvanidae). A candidate explanation for poor host population suppression is that adult females interfere with each other's foraging and reproductive behavior. We used simple laboratory microcosms to evaluate such mutual interference in terms of its overall effects on offspring production. We varied the density of the hosts and also the spatial structure of the environment, via the extent of population sub-division and the provision of different substrates. Production of C. tarsalis offspring was positively influenced by host density and by the isolation of females. With incomplete sub-division within microcosms offspring production was, in contrast, low and even zero. The provision of corrugated paper as a substrate enhanced offspring production and partially mitigated the effects of mutual interference. We recommend simple improvements to mass rearing practice and identify promising areas for further behavioral and chemical studies towards a better understanding of the mechanisms of mutual interference.