A problem of optimal design of a diagnosis system for faulty sensors i
s formulated as a problem of minimizing the cost required to construct
the allocation of sensors which realizes the required upper limit of
probability of false-alarm, lower limit of systematic error and upper
limit of probability of mis-alarm for the given set of sensors to be d
iagnosed. A concept of critical detectability is introduced correspond
ing to the degree of freedom of the sensor system and a method is pres
ented to solve this problem by use of this concept and the branch-and-
bound algorithm.