Density matrix approach has been employed to study analytically the absorption spectra of small semiconductor quantum dots under strong confinement regime. The results are obtained for a single quantum dot (SQD) as well as for inhomogeneous distribution of quantum dots (IQD) with Gaussian distribution of quantum dot sizes. A numerical analysis has been made for SQD and IQD of CdS crystal with data taken from recent experimental work. A negative change in the absorption coefficient occurs in the shorter pump wavelength side of the spectrum due to the biexcitonic contribution. The wavelength at which crossover from positive to negative values of the change in absorption coefficient occurs is found to depend upon both, the QD size as well as the excitation intensity. The results agree satisfactorily with the experimental observations in small CdS quantum dots.