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Cisco's IOS doesn't implement memory defragmentation, so if you have lots of certain activities, and little free memory, fragmentation can cause there to be insufficient memory allocation errors. (BTW, so can memory leak bugs.)
Assuming you're not dealing with a bug, the three possible methods to avoid this issue are: reboot on a routine basis (if supported, the warm reload feature will reboot much quicker), add RAM to the device (if possible), reconfigure to reduce activity to reduce memory usage.
