We analyze the influence of the excited states (ES) on the dynamics of optically injected quantum dot lasers. In our model carriers from the wetting layer are first being captured into the excited state and then relax to the ground state. Our results indicate that the dynamics of optically injected QD lasers are driven by the relaxation time in the sense that it scales the regions where the laser exhibits distinct behaviors. It also influences the size of the locking region. The capture time has minor effect and influences mainly static characteristics. Bifurcation maps are studied with the main focus on self-pulsations. In particular our results show that the dynamics of self-pulsations is consistent with experimental observations of excitable dynamics. To utilize the self-pulsations we propose and investigate properties and limitation of the system used for all-optical signal processing. In our approach the slave laser is switched by the information signal acting as a master laser between the locking region and the region of self-pulsations. The maximum bit rate of such a system has been estimated to be 0.5 GHz. This value can be improved to 1 GHz by applying correction to the detection algorithm. The correction reflects the nature of self-pulsations and is calculated from the distribution of the time the system needs to fire a pulse.