The conventional optimization problem, where the nominal values of the design variables are of interest, is extended to include the optimal allocation of manufacturing tolerances. Thus the tolerances are also treated as design variables. The approach is illustrated by an example using a sequence of increasingly generalized formulations. Finally the solution is provided in general mathematical form. This paper limits the model to a production process with 100 percent acceptability. The method appears to offer a practical technique provided a satisfactory cost function can be defined.

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