An engine assembly includes a control module configured to receive a torque request and an engine configured to produce an output torque in response to the torque request. The control module includes a processor and tangible, non-transitory memory on which is recorded instructions for executing a method for supervisory model predictive control. The control module includes a multi-layered structure with an upper-level (“UL”) optimizer module configured to optimize at least one system-level objective and a lower-level (“LL”) tracking control module configured to maintain at least one tracking parameter. The multi-layered structure is characterized by a decoupled cost function such that the UL optimizer module minimizes an upper-level cost function (CFUL) and the LL tracking control module minimizes a lower-level cost function (CFLL). The system-level objective may include minimizing fuel consumption of the engine and the tracking parameter may include delivering the torque requested to engine.