The diagnostic resolution issues are usually addressed with a quantitative or semiquantitative approach in the reported studies concerning sensor placement procedures. Since the required information for implementing the traditional methods may not be always available, a SDG-based strategy is proposed in this paper to design the sensor networks on the basis of qualitatively predicted fault evolution sequences. To achieve a maximum level of resolution and, at the same time, to ensure observability, the corresponding design problems are formulated as integer programs in this work. Two alternative strategies are also developed for producing the optimal solutions. The feasibility of the proposed method is demonstrated with three examples.