Hi Ragini
I don't see the benefit to doing this. You will still need to create 500 vendors and 500 customers but now you will also need to spend the time to link them all together.
Considering the vendor side of the problem I can see that the standard 0007 account group and GS partner function wouldn't allow this setup. At the very least you would need allow account group 0007 to fulfil the GS role.
Even if you did that I'm not sure you would be able to create the required STO document. Would you enter the main vendor into the PO header and then select the GS partner you require? In this case which vendor would be used to determine the supplying plant (you would need to test this).
Do you use MRP to plant your stock transfers between these sites? If you do then I'm pretty certain this would not work. MRP works from the plant and would assign the associated GS vendor as the vendor in the stock transport requisition.
Regard
Robyn