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Manufacturing of the internal combustion engines (ICEs) has very critical requirements on the precision and tolerance of engine parts in order to guarantee the engine performance. As a typical complex nonlinear system, small changes in dimensions of ICE components may have great impact on the performance and cost of the manufacturing of ICES. In this regard, it is still necessary to discuss the optimization of the tolerance and manufacturing precision of the critical components of ICEs even though the tolerance optimization in general has been reported in the literature. A systematic process for determining optimal tolerances will overcome the disadvantages of the traditional experience-based tolerance design and therefore improve the system performance.