Accurate topology estimation is crucial for effectively operating modern distribution networks. Line outages in a distribution network change the network topology by disconnecting some parts of the network from the main grid. In this paper, an outage detection (or topology estimation) algorithm for radial distribution networks is presented. The algorithm utilizes noisy power flow measurements collected from a subset of lines in the network, and statistical information characterizing errors in forecasting load demands. Additionally, a sensor placement scheme is presented. The sensor placement provides critical sensing for the outage detection algorithm so that any number of possible outages in the network can be detected. The performance of the proposed outage detection algorithm using the proposed sensor placement is demonstrated through several numerical results on the IEEE 123-node test feeder.