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This paper presents the effect of manufacturing tolerance on performance and stability boundaries of a transonic fan using a RANS simulation. The effect of tip gap and stagger angle was analysed through a series of single passage and double passage simulation; based on which an optimal arrangement was proposed for random tip gap and random stagger angle in case of a whole annulus rotor. All simulations were carried out using NASA rotor 67 as a test case and AU3D an in-house CFD solver. Results illustrate that the stagger angle mainly affects efficiency and hence its circumferential variation must be as smooth as possible. Furthermore, the tip gap affects the stability boundaries, pressure ratio and efficiency. Hence its optimal configuration mandates that the blades be configured in a zigzag arrangement around the annulus i.e. larger tip gap between two smaller ones.