• Equivalent states are identified and merged to reduce the number of states by using the method of partitioning.

• First partition consists of all the states. $P_1$ = (A, B, C, D, E, F, G)

• Second partition is done by observing outputs for each state and separating dissimilar output states. $P_2$ = (A, D, E) (B, C, F, G) All the further partitions are done by separating states on the basis of their respective next states.

• $P_3$ = (A, E)(D)(B)(C, F, G)

  $P_4$ = (A, E)(D)(B)(C, F)(G)

• No further partitions are possible.

• The states in the same partition are indistinguishable. These redundant states can be merged to reduce the number of states. Thus, A = E, and C = F.

• Unique states are (A, B, C, D, G)

• Reduced state table is:

State diagram of the reduced state table is: