Overconstrained assemblies such as aircraft sub-assemblies present a challenge to production planners, as variations in parts and processes can make it difficult to achieve all assembly Key Characteristics (KCs) simultaneously. Despite assigning tight tolerances to sub-component manufacture, part variation propagation necessitates expensive and time-consuming variation management processes such as shimming in order to ensure the final assembly is within specification. This paper presents for the first time a variation propagation model for overconstrained assemblies, and develops a novel modelling method to connect variations with production costs. This facilitates a novel process optimisation method based on variation propagation, with the ability to analyse the trade-offs between the cost and achievable variation limits of the entire manufacturing chain in order to minimise the overall manufacturing cost. An overconstrained wing spar assembly is used as a case study to validate the methodology.