The quote from Bruno's grandmother would be found towards the end of Chapter 8 in The Boy in the Striped Pajamas.
It's difficult to identify an exact page number for a particular quote. Different editions of the book makes pagination different. However, the quote is near the end of chapter 8. Bruno's grandmother says it to her son, Bruno's father.
The quote is found in the chapter entitled "The Reason Why Grandmother Stormed Out." This is a fair indication of how Bruno's grandmother viewed her son's actions. She could not support what he was doing. Bruno's grandmother is "ashamed" at what the Nazis are doing and how her son is a part of the organization. Both Bruno and Gretel are sitting at the top of the stairs when they hear Grandmother criticize their father. As Bruno recalls this moment, it is clear that everyone does not believe in what Bruno's father is doing.
In the overall scope of the novel, the quote occurs near its middle. Its placement is significant because it shows that the life that Bruno's father has made for himself and his family is not necessarily as perfect as it seems to be. Rather, there are elements in what he is doing that can cause shame, foreshadowing the book's resolution.