Hi Jyothi,
If you provide Active Area as 'MDG' that means you are creating Flex Entity but i guess as you are working on vendor, you will be creating Reuse Entity and not Flex one.
Just Create your 'Z' Reuse active are and 'Z' access class for your Active area and assign your 'Z' Active Area at time of Type 4 Entity creation, Don't enter any structure name here.
Once you create your entity, go to 'Generate Data Model Specific Structure' and enter for your newly added entity as per below screen shot.
In Place of 'BP_CUS_CC', give your entity name, In Place of '/MDGBPX/' give as 'ZXX', same PP_YourEntityName, ES_YourEntityName, FP_YourEntityName, KY_YourEntityName, In Last column give your package name. And it will create Structures(Staging Area) for your newly added 'Z' entity.
Regards,
Sudhir Wakodikar