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Optical burst switching (OBS) is a promising switching technology to exploit the potential benefits of optical communication and, at the same time, support statistical multiplexing of data traffic at a fine granularity. To quantify its benefits, the paper describes several typical burst assembly algorithms and studies their impact on the assembled burst traffic characteristics as well as the performance of TCP traffic. Also described is a proactive burst scheduling algorithm, called burst overlap reduction algorithm (BORA), which schedules locally assembled bursts in such a way as to reduce burst contention at downstream nodes in OBS networks. Furthermore, to provide analytical insights into performance evaluation of OBS networks, a burst loss model at an OBS node and its extension to different reservation protocols are presented.