An approach, which utilizes Modulation Transfer Function (MTF), is used to develop tolerances for manufacture, assembly, and use of an optical system, and to predict the overall system MTF. This is accomplished by determining the MTF sensitivities for radius of curvature, thickness, and index of refraction for each optical surface. Each of these optical elements can then be toleranced for manufacturing and assembly based upon MTF sensitivity. In addition, the MTF effect due to tilt and decenter of each optical component can also be determined; this provides a bases for system alignment and focus requirements. The manufacturing effect for each optical component is converted to an MTF equivalent. The overall system MTF is then predicted by cascading the design MTF, focus MTF, alignment MTF, and manufacturing MTF.