Tolerance allocation standards do not exist for mechanical systems whose response are time varying and are subjected to discontinuous forcing functions. Previous approaches based on optimization and numerical integration of the dynamic equations of motion encounter difficulty with determining sensitivities around the force discontinuity. The Alternating Frequency/Time approach is applied here to capture the effect of the discontinuity. The effective link length model is used to model the system and to account for the uncertainties in the link length, radial clearance and pin location. Since the effective link length model is applied, the equations of motion for the nominal system can be applied for the entire analysis. Optimization procedure is applied to the problem where the objective is to minimize the manufacturing costs and satisfy the constraints imposed on mechanical errors and design variables. Examples of tolerance allocation are presented for a single cylinder internal combustion engine.