Dynamic allocation is the optimal method for handling the described scenario. It allows computing resources such as CPU and memory to be allocated on-demand, which can be increased or decreased based on the applications' requirements. This ensures that resources are efficiently used during periods of low demand and can scale up during usage spikes, leading to cost savings and optimal utilization of the cloud platform. Fixed allocation, on the other hand, would not provide the necessary flexibility, as it involves assigning a set quantity of resources regardless of the actual demand. Oversubscription is the practice of allocating more resources to tenants than the underlying infrastructure can provide, which may lead to performance issues when resources are over-committed. Limiting and reservations are more about setting boundaries for usage and guaranteeing minimum resources, respectively, which would not be as adaptive as dynamic allocation.