To me, this is probably one of the hardest part of the design process. There are many problems associated with creating tolerances for various aspects of the product. On the one hand if you make the tolerance too tight, it may be difficult for manufacturability or become extremely expensive when ordering from your vendors. When the tolerance is too loose, you get parts which don’t assemble right or features which do not work. For example, if you have a hole which is on the lower control limit and a pin which has a diameter on the upper control limit. This combination may make it so the pin does not end up fitting into the hole and there is a failure. This is how tolerance stacking works and can be a difficult calculation sometimes. Sometimes, it all just comes down to trial and error and running endless combinations to see which dimensions for certain features will result in a successful product.