Random Early Detection (RED), one of the most popular Active Queue Management (AQM) schemes, has become an effective mechanism for supporting end-to-end traffic congestion control and has attracted lots of research efforts on the analysis of its performance properties under various networking scenarios using software simulation. This paper develops an analytical performance model for a finite capacity queueing system with AQM mechanisms based on the instantaneous number of packets in the queue. We consider two different traffic classes modeled by Poisson arrival processes. Expressions for the aggregated and marginal performance measures including the mean queueing length, response time, system throughput, probability of packet losses and mean waiting time are derived. The validity of the analytical results is demonstrated by comparing the analytical results and those obtained from simulation experiments.