Active Queue Management (AQM) with multiple thresholds is an effective mechanism of buffer allocation for differentiated Quality-of-Service (QoS) of heterogeneous traffic. This paper develops an original analytical model for a finite buffer queueing system with AQM under two heterogeneous classes of traffic which are modeled, respectively, by the nonbursty Poisson Process and bursty Markov-Modulated Poisson Process (MMPP). We have derived the aggregated and marginal performance measures including the mean queue length, response time, system throughput and loss probability. Furthermore we have validated the analytical results through simulation experiments and adopted the model to evaluate the performance of the queueing system with AQM scheme under heterogeneous traffic.