A network device for dynamically allocating memory locations to plurality of queues. The network device includes means for determining an amount of memory buffers that is associated with a port, for assigning a fixed allocation of memory buffers to each of a plurality of queues associated with the port and for sharing remaining memory buffers among the plurality of queues. The remaining memory buffers are used by each of the plurality of queues after the fixed allocation of memory buffers assigned to the queue is used. The network device also includes means for setting a limit threshold for each of the plurality of queues. The limit threshold determines how much of the remaining memory buffer may be used by each of the plurality of queues. The network device further includes means for defining at least one color threshold for packets including a specified color marking and for defining a virtual maximum threshold. When one of the plurality of queues requests access to the remaining memory buffers and the remaining memory buffers is less than the limit threshold for the queue, the virtual maximum threshold is defined for the queue. The virtual maximum threshold replaces the limit threshold and packets associated with the at least one color threshold are processed in proportion with other color thresholds based on the virtual maximum threshold ceiling.