A method and system for managing inventory by expected profitability. In one embodiment, a method may include individually evaluating a respective expected profitability for each of a number of inventory items, and individually determining a disposition of each of the number of items dependent upon its respective expected profitability. In one particular implementation of the method, individually evaluating the respective expected profitability of a given item may include forecasting an estimated date of transaction corresponding to the given item, forecasting an estimated revenue corresponding to the given item as of the estimated date of transaction, estimating accrued costs of holding the given item until the estimated date of transaction, and comparing a total cost of the given item against the estimated revenue, where the total cost may include the accrued costs of holding the given item until the estimated date of transaction.