We assume that $1\%$ of characters in a document are typos.
We want to find the probability of having at most 2 typos inside an 100 characters document.
We want to find it in two ways:
a)Precisely
b)Approximately
For a: Let $X$ denote a distinct random variable. We want $$P(X \le 2) = $$ $$P(X=0)+P(X=1)+P(X=2) =$$ $$\binom{100}{0}(0.01)^0(1-0.01)^{100-0}+\binom{100}{1}(0.01)^1(1-0.01)^{100-1}+\binom{100}{2}(0.01)^2(1-0.01)^{100-2}$$
Is this right?
For b:
Can someone explain with simple words how do we handle this approximately?
Do we choose always a distribution for this?
And if so, how do we choose the right distribution?
Please KIS (Keep It simple) as much as you can. Thank you.
This is linked to: Find the probability for defective diskettes.
The assumption is poorly stated. Taken literally, it would mean that a $100$ character document always has exactly $2$ typos. What it should say is that each character has probability $0.01$ of being a typo, and the characters are independent.
As in the last example, the true distribution is binomial, in this case with $n = 100$ and $p = 0.01$.
There are basically two approximations to the binomial distribution that are considered in elementary probability: the Poisson and the normal. The Poisson distribution is good when $n$ is large and $p$ is small so that $np$ is not too big. The normal is good when $n$ is large and $p$ is not very close to $0$ or $1$. In this case $p = 0.01$ is small, so the approximation to use would be Poisson.
EDIT: For interest, the graph below shows, as a function of $p$, the maximum (for integers $x$ from $0$ to $100$) of the error in $P(X \le x)$ when using the Poisson distribution (in blue) or the normal distribution with continuity correction (in red), where $X$ is binomial with $n=100$. From this point of view, Poisson is better for $p < 0.115$ approximately.