Colloidal nanoparticles are attractive optical materials for their low threshold nonlinear response and thus all-optical, nondestructive features which are important in biomedical optics and optical processing. We develop a theoretical scheme based on numerical solution of Nonlinear Schrödinger Equation and nonideal gas model of nonlinearity to investigate temporal analysis of optical bistability (OB) and modulation instability in colloidal nanoparticles. Our scheme determines the dependence of a nanosuspension system dynamic state on characteristic/control parameters including external feedback depth, nanosuspension length, and the initial density of nanoparticles as well as the optical input power. We show that these parameters are intensely correlated. We also indicate that the nonlinear response of nanosuspension may be saturated over a threshold of input power, and thus an unexpected procedure of system evolution toward stability rather than transition to chaos will occur. Consequently, provided that internal feedback is present inside the nanosuspension controlling chaos will be attainable by simply adjusting the optical input power as the control parameter in contrast to the other chaos control methods which require external injection. Finally, we propose an approach which gives a measure of switching time to optimize OB. The optimum results are obtained for the lowest taken values of characteristic/control parameters.