Output from the 1998 Product Development Value Stream Workshop: A Framework for Understanding Information Flow in the Product Development Process

The descriptions below and the attached diagrams are outputs of the 1998 LAI Product Development Focus Team workshop on the Value Chain in Product Development. A working group at that workshop was asked to model the product development process: in terms of the phases of product development and their interfaces, boundaries and outputs. Their work has proven to be generally useful to LAI researchers and industry members, and so is formalized here.

Modeling Stock Order Flows and Learning Market-Making from Data

Stock markets employ specialized traders, market-makers, designed to provide liquidity and volume to the market by constantly supplying both supply and demand. In this paper, we demonstrate a novel method for modeling the market as a dynamic system and a reinforcement learning algorithm that learns profitable market-making strategies when run on this model. The sequence of buys and sells for a particular stock, the order flow, we model as an Input-Output Hidden Markov Model fit to historical data. When combined with the dynamics of the order book, this creates a highly non-linear and difficult dynamic system. Our reinforcement learning algorithm, based on likelihood ratios, is run on this partially-observable environment. We demonstrate learning results for two separate real stocks.

Corner Flows in Free Liquid Films

A lubrication-flow model for a free film in a corner is presented. The model, written in the hyperbolic coordinate system ξ = x² – y², η = 2xy, applies to films that are thin in the η direction. The lubrication approximation yields two coupled evolution equations for the film thickness and the velocity field which, to lowest order, describes plug flow in the hyperbolic coordinates. A free film in a corner evolving under surface tension and gravity is investigated. The rate of thinning of a free film is compared to that of a film evolving over a solid substrate. Viscous shear and normal stresses are both captured in the model and are computed for the entire flow domain. It is shown that normal stress dominates over shear stress in the far field, while shear stress dominates close to the corner.

Sequence-Seeking and Counter Streams: A Model for Information Processing in the Cortex

This paper presents a model for the general flow in the neocortex. The basic process, called "sequence-seeking," is a search for a sequence of mappings or transformations, linking source and target representations. The search is bi-directional, "bottom-up" as well as "top-down," and it explores in parallel a large numbe rof alternative sequences. This operation is implemented in a structure termed "counter streams," in which multiple sequences are explored along two separate, complementary pathways which seeking to meet. The first part of the paper discusses the general sequence-seeking scheme and a number of related processes, such as the learning of successful sequences, context effects, and the use of "express lines" and partial matches. The second part discusses biological implications of the model in terms of connections within and between cortical areas. The model is compared with existing data, and a number of new predictions are proposed.