Embodiments described herein provide a supervisor for fault management at a production system. During operation, the supervisor can obtain a set of sensor readings and a state of the production system. A respective sensor reading is an output of a sensor in the production system. The supervisor can then determine, using an artificial intelligence (AI) model, whether the set of sensor readings accommodates a fault associated with a corresponding sensor. Subsequently, the supervisor can determine an action that mitigates an effect of the fault and modify the set of sensor readings based on the action. Here, the modified set of sensor readings is used by a controller that controls the production system.