There are several methods for inducing packet loss, some more elegant than others. The easiest way to induce packet loss is to unplug the Ethernet cable or disable it during transmission and then re-enable it; hardly elegant but effective. There's also a freeware utility available using a Linux box that you can set up on a virtual machine to induce packet loss. NIST Net is a network emulation toolkit that is free and allows you to manipulate the packet loss in a more controlled environment.
Enterprise testing tools also exist like Shunra VE and Anue's Network Emulator. These tools are excellent for emulating network (WAN and LAN) environments for adequate testing including various media, packet loss, delay, and jitter factors.
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