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Iterative Diagnosis can be used for both stuck-at and transition faults.
It is not necessary to regenerate all production patterns with one-hot masking. Diagnosis tool works with compressed patterns. The 1hot expanded patterns are usually used to identify the failing cell.
You can find more details about the usage of 1hot Compressed Patterns here: https://supportnet.mentor.com/docs/201501063/docs/htmldocs/mgchelp.htm#context=tessent_diagnosis_user&href=reporting_tro…
Thanks a lot!