Electronic components are subject to variations in their parameters and sometimes to long-term drifts due to some factors like temperature. Most controlled parameters are measured at the end of production. Components are then assigned the batches like tolerance bands or bins. Otherwise they are rejected if they fall beyond the limits. For example, typical resistors are provided in tolerance ranges of 1 percent, 5 percent, 10 percent and 20 percent about the nominal resistance. Similarly LEDs are tested and sorted by color and brightness into unique bins.
For many components, parameters are stated as the Maximum, Minimum and Typical values. It is never a good idea to design critical circuit operation around the parameters which just have the Typical Values. Since they are not usually measured and are not guaranteed.
Having created the correct functional design, it is important to evaluate the effects of parameters variations on the yield, stability and reliability. This is called Tolerance Design.
The first step in tolerance design is to determine which parameter values are likely to be most sensitive in affecting yield and performance. The next step is to determine the extent of variation of all the important parameter values, by reference to the detailed component specifications. This step is sometimes omitted by the designers using list of preferred parts, which list only primary nominal values and tolerances, without giving full details of other data relevant to the application. All relevant parasitic parameters should be evaluated at this stage.
It is possible to design-in compensating features for some variation, for ex. by using temperature compensation components such as thermistors or adjustable components such as variable resistors. However, these add complexity and usually degrade reliability, since they are themselves prone to drift, and adjustable components can be degraded by wear, vibration and contamination. Wherever possible the design should aim for minimum performance variation by careful selection of parameter values and tolerances.