a) The US Food and Drug Administration has veto power over the choice of drug names. In 2004, it used this power regularly, rejecting 36% of the names proposed by companies for reasons such as sounding too much like another product (and causing confusion at the pharmacy). Suppose that a company spends $500,000 developing each proposed name, but there is a 50-50 chance of a name being rejected. If the review of names occurs independently, what is the probability that the company will spend more than $1 million developing a name?
b) A manufacturer of LCD panels used in television has decided to ship only panels with at most one defective pixel. Defective pixels are the result of randomly located flaws in the glass used to make the panel. To be profitable, the manufacturer must ship 85% of its panels. If an LCD panel has 1,024×768 = 786,432 pixels, how small must the chance for a defective pixel be in a panel in order for the probability of shipping a panel to be 0.95?
What does the function commands BINOMDIST(3,10,0.5, FALSE) and POISSON (4, 2, TRUE) yield in Microsoft Excel? What are these values? What parameters do the values 3, 10, 0.5, FALSE, 4, 2, and TRUE represent?