As Costco, Sam's Club and their big-box counterparts illustrate, offering customers discounts for buying in bulk can be a route to success. The question for vendors is this: just how much discount for how much quantity? Not enough discount and customers won't bite. Too liberal of a discount will eat up your profits.
What's more, this becomes more than a straightforward supply and demand equation, since demand for the second item depends on the price of the first. Demand for the third depends on the prices for both the first and second, and so on.