The generation and propagation of action potentials in the excitatory and inhibitory cell types of the olfactory bulb are simulated by applying multi-compartmental modeling technique. Detailed models of the main cell types of the olfactory bulb have been presented previously. Further simulations on granule and periglomerular cells have been done to find proper parameters matching to the physiological recordings. Elementary synaptic interactions and dynamic behaviour of small networks of excitatory and inhibitory neurons have been studied. To investigate the relationship between the anatomical structure of the neural circuits of whole olfactory bulb and the generated firing patterns, further series of simulations have been done.