Optimising a Pork Processor's Weekly Deboning Decision under Contract Constraints: A 2024 Case Study of a Russian Producer

A pork processor doesn't sell pigs. It sells half carcasses or the twenty-one different products that deboning yields, and the prices of the two options vary in different ways each week. This results in a real decision. Approximately 79% of the firm's volume is under contract and 21% is free each week, with the firm deciding whether to sell it as half carcasses or debone it into cuts. This paper models that choice for a large vertically integrated Russian pork producer, based on the firm's own 2024 data: 52 weeks of market prices for the half-carcass and 21 cut products, the plant's fabrication yields, its processing tariffs (10 ₽/kg for slaughter and 18.2 ₽/kg for deboning), weekly volumes averaging 3.4 million kg, and the allocation the firm actually made. Since slaughter is paid in both cases, the choice becomes a threshold one: debone only if the cutout price is higher than the half-carcass price by more than the deboning cost. That spread averaged 19.1 ₽/kg with a standard deviation of 10.0, which was nearly the same as the cost of deboning (18.2 ₽/kg), and the decision was close, with deboning winning in 27 weeks and selling whole in 25. Although the optimal decision map varies significantly (38, 27 and 17 deboning weeks respectively), the gain remains in the range of 145-174 million ₽ over the year relative to the firm's actual allocation, if only the free 21% are re-optimised each week. The economically significant question is then which cost concept is applicable — the shutdown rule in miniature. The perfect-information gain is captured by a simple rule based on the previous week's prices, which accounts for 72% of the gain.