In my simulation of the $M/M/1 K$ Queue, the arrival rate $\lambda$ is $2.7\ \mathrm{ jobs/s}$ while the service rate $\mu $ is $3 \ \mathrm{ jobs/s}$. The capacity $K$ of the buffer is $5$. I am calculating the percentage of jobs dropped as follows:
ρ = λ/μ
ρ = 2.7/3
ρ = 0.900
Jobs Dropped % = [(1-ρ)x(ρ^K) / (1-ρ(K+1))]x100
Jobs Dropped % = [(1-0.9)x(0.9^5) / (1-0.9^(5+1))]x100
Jobs Dropped % = [(1-0.9)x(0.9^5) / (1-0.9^(5+1))]x100
Jobs Dropped % = 12.6022
Am I doing it correctly? As per my limited knowledge, this dropped percentage must be higher because the system is approximately $90\%$ utilized and the buffer size is $5$ only.
Your formula is correct with one qualification: how $K$ is defined. If the system is limited to 5 jobs including the one in service, 12.6% is correct. If the system can hold the job in service plus 5 waiting, then use $K=6$ in the formula for percentage dropped, which produces an estimate of about 10.2%.