how does the software calcute reservoir storage volume and unmet demand?

Reservoir storage capacity is entered by the user as part of the Physical data for the Reservoir. When you're looking at the data for Current Accounts, you have the option to enter a Volume-Elevation curve for your reservoir.
The unmet demand will depend on the priority assigned (by the user) to filling the reservoir relative to the priority given to other demands in your model.
See corresponding help topics and the Demand Analysis and Reservoirs and Power Production chapters of the Tutorial.