German shepherd afraid of new puppy

Question
We got our german shepherd when he was approximately 2 years old.  He came to our house where we had a 8 year old female lab who was dominate.  The german shepherd took his place in our pack. After things settled in they played together all the time.  Several months ago we had to put our yellow lab down.  Recently, a black lab male puppy became available to us.  We brought him home at around 8 weeks old.  My german shepherd is very unsure.  Everytime the puppy approaches him and jumps on him he growls and shows his teeth as well as backs up.  He now will not come near me or walks very cautiously around. I stop the puppy from jumping on the older dog.  Is this normal?  Will this take time to work itself out? How can I be a stronger pack leader to help out my german shepherd?  Should I return the puppy?  Really don't want to stress out my German shepherd.

Answer
It is going to take some time to adjust to the new puppy as he's being forced with new behavior and has no clue how to handle it. How old is the shepherd now, just out of curiosity? But as far as stopping the puppy from jumping, you can either allow it and allow the shepherd to warn him so the pup can get the picture of what behavior is and what is not allowed, just like the bitch would do to curb behavior with her litter. Otherwise, you can use redirection and training so the puppy can realize what else he can do instead of bothering the poor shepherd. And basically that would entail you to be there every step of the way using toys or verbal distraction to keep the puppy occupied. The more suitable route would involve both ways. And it's perfectly okay to contain the pup in an area so that the shepherd doesn't feel the need to hide.

The hard part of all of this is making sure he doesn't get the feeling he's being replaced by the new pup and the pup is at the crucuial age where he needs to most training and socializing. As hard as it's going to be, I would initiate a routine as far as feeding, walking and training goes. Don't play favorites and keep in mind that we need the puppy to be able to figure out his role in the household.