We discuss the first few stages of olfactory processing in the framework of a layered neural network. Its central component is an oscillatory associative memory, describing the external plexiform layer, that consists of inhibitory and excitatory neurons with dendrodendritic interactions. We explore the computational properties of this neural network and point out its possible functional role in the olfactory bulb. When receiving a complex input that is composed of several odors, the network segments it into its components. This is done in two stages. First, multiple odor input is preprocessed in the glomerular layer via a decorrelation mechanism that relies on temporal independence of odor sources. Second, as the recall process of a pattern consists of associative convergence to an oscillatory attractor, multiple inputs are identified by alternate dominance of memory patterns during different sniff cycles. This could explain how quick analysis of mixed odors is subserved by the rapid sniffing behavior of highly olfactory animals. When one of the odors is much stronger than the rest, the network converges onto it, thus displaying odor masking.
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